Will Four Large-Scale Public Offering PF Projects Including CJ Live City Be Revitalized?

Review of Joint Public-Private Project Adjustment Request
Concerns Over Some Sections Turning Into Profit-Driven Ventures
Calls for Thorough Verification

As the government begins reviewing a total of 20 trillion won worth of public-private joint construction investment projects (PF) for which it has requested adjustments, attention is focused on whether four large-scale PF projects with significant disagreements between public and private operators will be normalized. In particular, some project sites are requesting to seek profit-making businesses through changes in use, contrary to the original public offering purpose, raising calls for thorough verification.

Among the 15 projects the government announced on the 8th that it will review through the Public-Private Joint Construction Investment Project (PF) Adjustment Committee, the projects attracting attention are CJ Live City, Goyang Tourism and Culture Complex Accommodation Facility Construction Project, Hallyu World Hotel Development Project, and Incheon Geomdan New Town 101 Station Area Development Project. These are large-scale public offering-type PF projects where local governments and public institutions selected private operators through public offerings, with leading groups (affiliates) such as CJ, SM, and Lotte participating as operators.

CJ LiveCity Arena side perspective view. [Photo by CJ LiveCity]

These projects share the common issue of slow progress due to conflicts with public operators and relevant authorities over permits related to land use plans, development ratios, and public contribution rates.

First, CJ Live City is a project for which CJ Group (CJ E&M) signed a business agreement and land supply contract in 2016. However, the project has been continuously delayed as it took as long as 50 months just to obtain permits from Gyeonggi Province and Goyang City. Despite this, Gyeonggi Province did not allow an extension of the completion deadline, leading to ongoing disputes over delay penalties.

Amid difficulties, construction of the arena, the core facility of CJ Live City, began in October 2021 but was halted in April this year. This was due to the rapid increase in construction costs and financial expenses caused by the Russia-Ukraine war and the downturn in the real estate and construction markets.

Accordingly, CJ has applied for this adjustment, requesting an extension of the project period, exemption from delay penalties, cancellation of the business agreement for part of the project site, and changes to the land use plan.

Regarding SM Group-related projects such as the Goyang Tourism and Culture Complex Accommodation Facility Construction Project (GH-SM Steel) and the Hallyu World Hotel Development Project (GH-Hallyu World Hotel), delays in the establishment of Hallyu World tourism infrastructure, including CJ Live City, which should have preceded them, have hindered proper project progress, putting them in a position where they must pay penalties for delayed construction starts.

Therefore, they are requesting adjustments such as extension of the construction start deadline due to project delays, changes to land use plans (floor area ratio, height restrictions, etc.), hotel development ratio (from 70% to 50%), and public contribution rates.

However, some express concerns that the requested adjustments to land use plans, hotel development ratios, and public contribution rates for the Goyang Tourism and Culture Complex Accommodation Facility Construction Project and the Hallyu World Hotel Development Project may deviate from the original intent and potentially transform into massive profit-making businesses such as officetel construction.

In fact, in 2018, one of these projects attempted to change 30% of the hotel site to officetel use, sparking opposition from Goyang citizen groups.

The Incheon Geomdan New Town 101 Station Area Development Project (Incheon Urban Corporation-Next V City PFV), in which Lotte Group participates, is facing difficulties due to delays in the permit process and rising construction and financial costs. It is known that proceeding with the project according to the original plan made with Incheon Urban Corporation would result in significant losses. Accordingly, Next V City PFV is requesting adjustments such as relaxation of district unit plans (officetel area from 50% to 70% of total floor area) and changes to the area of essential development facilities (from 55,000㎡ to 49,000㎡).

Going forward, the Adjustment Committee will review the projects and designate those subject to normalization. Then, the working committee (including the Korea Real Estate Board, Korea Research Institute for Human Settlements, etc.) will draft an adjustment plan. Based on the draft, the Adjustment Committee will prepare the adjustment plan, obtain the consent of the operators, and finalize it. If consent is given, the adjustment plan will be implemented as scheduled; if not, the project will be excluded from normalization targets.

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