Korean Air's Songhyeon-dong Site Finally Sold to Seoul City... "Price Negotiations Ongoing"

Seoul City and Korean Air Sign Sale Adjustment Agreement Near Songhyeon-dong on 26th
Third-Party Purchase Method Likely with Seoul City Securing Site through LH
Price Discrepancies Expected to Be Decided Later by Appraisal

View of Korean Air Songhyeon-dong site. [Image source=Yonhap News]

[Asia Economy Reporter Onyu Lim] Korean Air has ultimately decided to sell the Songhyeon-dong site in Jongno-gu, Seoul, to the Seoul Metropolitan Government. This comes five months after requesting mediation from the Anti-Corruption and Civil Rights Commission due to setbacks in the sale process following Seoul's announcement of a cultural park plan. The most likely scenario is a third-party purchase method where the Seoul Metropolitan Government secures the site through Korea Land and Housing Corporation (LH). However, the sale price has not yet been finalized.

According to industry sources on the 14th, Seoul and Korean Air plan to hold a signing ceremony for the sale adjustment agreement near the Songhyeon-dong site on the 26th. This agreement includes the timing and method of the sale of the Songhyeon-dong site, as well as the method for determining the sale price.

Jeon Hyun-hee, chairperson of the Anti-Corruption and Civil Rights Commission, who mediated between Seoul and Korean Air, also appeared before the National Assembly’s Budget and Accounts Committee on the 12th and responded to a related question from independent lawmaker Lee Yong-ho by saying, "A tentative conclusion on the mediation content has been reached." Chairperson Jeon added, "We expect good coordination among Seoul, Korean Air, and related institutions," and stated, "The conclusion will come out by the end of this month at the latest."

The third-party purchase method, where Seoul secures the Songhyeon-dong site through LH, is being cited as the most likely scenario. In this case, LH can promptly pay Korean Air. Last month, Seoul stated, "Considering Korean Air’s situation of needing to recover the sale amount by early next year, we are also reviewing and negotiating in detail a method where a third party pre-purchases the Songhyeon-dong site and later exchanges it with city-owned land." However, the sale price has not yet been agreed upon. Both sides plan to decide this through a future appraisal.

A Seoul city official said, "Since the mediation by the Anti-Corruption and Civil Rights Commission is not yet complete, there is nothing specific to disclose regarding the purchase method and price for the Songhyeon-dong site at this time." Seoul has already passed the 'Bukchon District Unit Plan Amendment' designating the 36,642㎡ Songhyeon-dong site as a cultural park through the Urban and Architecture Joint Committee.

The disagreement between the two sides over the Songhyeon-dong site began in May. Korean Air started the sale process in February to improve its deteriorating financial structure. Although 15 companies showed interest, the bid failed after Seoul announced plans to designate the Songhyeon-dong site as a cultural park.

In response, Korean Air filed a grievance complaint with the Anti-Corruption and Civil Rights Commission in June, requesting the suspension of administrative procedures, claiming damage to the sale process due to Seoul’s cultural park promotion. Under the commission’s mediation, Korean Air and Seoul held three attendance meetings and working-level meetings to discuss the timing and method of sale and payment procedures. Korean Air estimated the sale price at a minimum of 500 billion KRW, but Seoul proposed a compensation amount of 467 billion KRW, showing a difference in opinion.

The Songhyeon-dong site was home to royalty and prominent noble families during the Joseon Dynasty but lost ownership to foreign powers for 88 years due to Japanese exploitation and other factors. After 1997, ownership transferred to private companies, but the site was neglected for a long time, and citizens were unable to even look inside for 110 years.

Seoul plans to develop the Songhyeon-dong site, the last large undeveloped site in the heart of Seoul that holds 110 years of lost time, into a park in stages, considering its historical and cultural value and locational importance.

First, it will be designated as a park for public use to restore its sense of place, and then detailed plans for the park will be established through public discussions involving citizens and experts.

This content was produced with the assistance of AI translation services.