[Reporter’s Notebook] Yongsan Development: How to Avoid Hitting the Brakes Again

Hwang Seoyul, Reporter, Construction and Real Estate Department, Asia Economy

[Asia Economy Reporter Hwang Seoyul] "We will strengthen Seoul's urban competitiveness and lead the new Yongsan era." The voice of Seoul Mayor Oh Se-hoon, who announced the resumption of development of the 'Yongsan Maintenance Depot Site,' which had been a white elephant for 10 years after the project was stalled, carried a special determination. He emphasized that "the public sector will invest funds to build the site and infrastructure and then lease the land to the private sector," highlighting a project direction that is 'different from before.' This is likely because in the past, the private project finance investment company (PFV) leading the project went bankrupt due to the global financial crisis at the time, causing the project to lose momentum.

However, the industry holds a somewhat different view from Mayor Oh's rosy outlook. There are concerns that the project may proceed slowly due to vacancy rate risks. The reasons they cite include that it takes longer to lease an office than to sell a single housing unit, and that since most of the site?twice the size of Yeouido Park?is designated as commercial and business districts, the massive supply volume may make it difficult for the private sector to engage in the development project.

In fact, according to real estate consulting firm Cushman & Wakefield, the Magok District urban development project, where more than half of the total area is dedicated to business complexes, had an office vacancy rate of 40% in the second quarter of last year. Therefore, it is pointed out that the Yongsan Maintenance Depot Site, where 70% of the development area is composed of commercial and business uses, requires even more thorough consideration.

The fortunate thing is that this announcement is only a broad conceptual plan, leaving ample room to continue refining detailed plans. Consideration is needed on how to induce private companies to participate in the project and how to minimize vacancy risks. Mayor Oh expressed his expectations, saying, "If this space had been well utilized earlier, Seoul's competitiveness would have been quite significant." Nevertheless, to create a truly useful Yongsan that enhances Seoul's competitiveness, it is important to remember that, in addition to an advanced plan based on the past, all future possibilities must be considered to take two steps further.

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