MDM Group, Korea's largest developer, is beginning the process of selecting a builder for a six-star hotel in Haeundae District, Busan. The project will develop the former Haeundae Grand Hotel site and construct four buildings up to 49 stories tall. A sky lounge will be created on the hotel's 48th floor and opened to the public. Some major construction companies are said to be considering participating in the construction bid.
On Jan. 6, according to the development industry and the city of Busan, MDM Plus, a real estate developer under MDM Group, will begin the process this month to select a builder for the Haeundae Grand Hotel site development. An MDM Plus official said, "Within this month, we will confirm the intent to participate in the construction bid from major builders and receive proposals from corporations eligible to participate in the bid." The construction period is expected to take more than five years.
The project will build a six-star hotel with 310 rooms, 91 condo units, and 352 officetel units across four buildings up to 49 stories on a 12,594.2-square-meter site at 651-2 U-dong, Haeundae District. It received a building permit from the city of Busan at the end of last year, and the building area is 8,825.99 square meters (building-to-land ratio 70.08%), with a total floor area of 224,671.11 square meters and a maximum floor area ratio of 1,200%. It is close to Haeundae Beach and Songnim Park, and nearby are LCT The Sharp (LCT), Paradise Hotel Busan, and Busan Westin Josun Hotel.
The project site is where the Haeundae Grand Hotel once stood. Opened in 1996, the Haeundae Grand Hotel was one of Busan's representative hotels and also served as a venue for the Asia-Pacific Economic Cooperation (APEC) and the Busan International Film Festival. A Russian-born businessperson acquired it for 102 billion won in 2007, but after closing in 2019, it was sold to MDM Group in 2020. MDM's purchase price was 240 billion won.
MDM also acquired the nearby "Ibis Budget Ambassador Hotel" site for integrated development. The 170 billion won project financing (PF) bridge loan MDM took out to purchase the land has been fully repaid.
The observation deck (sky lounge) to be created on the hotel's 48th floor will be transferred to the city of Busan after completion as a public contribution through contributed acceptance. A city of Busan official said, "We have agreed with MDM Group on the transfer of ownership through a public contribution," and added, "This is a case where, while carrying out a large-scale project, a public contribution was secured through an observation deck rather than a traditional method."
Major builders have also begun reviewing participation in the bid. However, because hotel construction often undergoes frequent design changes and has relatively long schedules, builders may find it difficult to decide to participate in the construction bid. A construction industry official said, "Hotels often change designs during construction," adding, "Because of this, some may hesitate to participate in the bid." An official at a large construction company said, "We are at the stage of reviewing whether to participate in the bid."
Meanwhile, MDM plans to operate the hotel and condo directly and cover construction costs by selling the officetel units. Lee Young-rae, head of Real Estate Survey, said, "The location is good as it is right in front of Haeundae Beach, and considering recent sale prices at nearby LCT, the officetel sale price is expected to be set at more than 50 million won per pyeong (3.3 square meters)."