Seoul City and Korean Air Swap Land in Songhyeon-dong with Former Seoul Medical Center Site

Seoul City Reaches Tentative Agreement with LH and Korean Air
Agenda to be Reviewed at Seoul City Public Property Deliberation Committee on September 14
Expected to Proceed via Equivalent Exchange after Appraisal

Songhyeon-dong Korean Air site (Photo by Seoul City)

[Asia Economy Reporters Onyu Lim, Dongwoo Lee] The Seoul Metropolitan Government will transfer the former Seoul Medical Center's southern site in Samseong-dong, Gangnam-gu, to Korea Land and Housing Corporation (LH) in order to purchase the Songhyeon-dong site in Jongno-gu, Seoul, owned by Korean Air. This is a method of paying Korean Air for the Songhyeon-dong site by selling part of the Seoul Medical Center land to LH.

Seoul City announced on the 26th that it has reached a tentative agreement with Korean Air and LH on this matter. Seoul City plans to review the agenda at the Seoul Metropolitan Shared Property Deliberation Committee on the 14th of next month.

Korean Air initially planned to develop a Hanok hotel and other facilities on the Songhyeon-dong site (37,141.6㎡), which it purchased in 2008, but abandoned the project due to opposition from Seoul City. Subsequently, as the COVID-19 pandemic worsened its financial difficulties, Korean Air decided to sell the site to the private sector in February last year. However, conflict arose when Seoul City finalized a park plan for the Songhyeon-dong site in May of the same year and expressed its intention to purchase it.

Old Seoul Medical Center site, Samseong-dong, Gangnam-gu, Seoul

In response, the Anti-Corruption and Civil Rights Commission proposed that Korean Air sell the Songhyeon-dong site to Seoul City, with LH paying the purchase price and Seoul City providing LH with an equivalent amount of city-owned land. Candidate sites such as the Western Driver's License Test Center in Sangam-dong, Mapo-gu, were discussed, and after deliberation, the southern site of Seoul Medical Center at 171-1 Samseong-dong was finally selected as the land for exchange. A Seoul City official said, "To implement the mediation agreement signed by the three parties, we conducted several active consultations based on mutual trust."

The land area will be confirmed as an equal exchange through appraisal. Seoul City and Korean Air are conducting an appraisal of the Songhyeon-dong land aiming to complete it within the year. Once the final sale price is determined, an appraisal of the southern Seoul Medical Center site will be conducted, and an equivalent area will be divided and transferred to LH.

The zoning of the southern Seoul Medical Center site will remain as the current quasi-residential area. A Seoul City official explained, "We considered that if the zoning is upgraded, the appraisal value would increase, which could reduce the size of the land LH can receive in the exchange."

LH is expected to build large-scale multi-family housing on the Seoul Medical Center site. Previously, the government announced through the August 4th supply plan that 3,000 public housing units would be supplied on the parking lot site adjacent to the southern Seoul Medical Center site. However, the proportion of multi-family housing in the total floor area of the southern Seoul Medical Center site is limited to 20-30%. The rest must be developed as a mixed-use project. Seoul City plans to prepare a separate urban plan for the remaining land after the exchange.

Seoul City plans to continue discussions with LH on the timing of ownership transfer and then conclude the exchange contract after the Seoul Metropolitan Council's approval of the shared property management plan in November. Once the land exchange process is completed, Seoul City is expected to prepare and announce specific plans for utilizing the Songhyeon-dong site. The construction of the Lee Kun-hee Museum is currently being strongly considered.

Meanwhile, once the sale of the Songhyeon-dong site is completed, Korean Air's financial restructuring efforts, which have been underway since last year, will effectively be finalized. Industry insiders expect the final price of the Songhyeon-dong site to be decided in the range of 500 billion to 700 billion KRW, considering the recent rise in publicly announced land prices. Seoul City had set a compensation budget of 467.133 billion KRW for the Songhyeon-dong land last year. Korean Air has also prepared a self-rescue plan to secure 500 billion KRW in liquidity through the sale of the Songhyeon-dong site. A Korean Air official said, "The completion of the sale of the site is expected to contribute to financial improvement."

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