Controversial 'Gwangju Jungang Park District 1'... Lotte Construction "Sales May Start as Early as Next Month"

PF Loan Maturity Extension Approaching, Proceeding as Planned
"Hanyang Must No Longer Delay Project"
Hanyang Claims "Woobin Industry Changed Contractor and Shareholders Without Permission"
Calls for New Agreement After Reconsideration from Scratch

The first sale of the Gwangju Metropolitan City’s ‘Gwangju Central Park District 1 Private Park Special Project,’ with a total project cost reaching 2.1 trillion KRW, will begin next month. While mid-sized construction company Hanyang is demanding the Gwangju city government to ‘reconsider the project from the beginning’ claiming it wants to secure the construction rights for this project, the current contractor, Lotte Construction, announced that it will proceed with the sales schedule regardless.

Aerial View of 'Gwangju Central Park District 1' in Gwangju Metropolitan City

'Lotte Castle Signature' Sale Next Month

According to industry sources on the 6th, Lotte Construction will sell 2,772 units of ‘Gwangju Central Park District 1 Lotte Castle Signature’ next month. A Lotte Construction official stated, "The project’s sales method was recently finalized as pre-sale, and considering that sales were temporarily suspended until the 22nd of this month due to the Korea Real Estate Board’s subscription home system overhaul, sales will begin as soon as the system resumes." He added, "Depending on the speed of administrative tasks such as sales approval, we expect to complete sales by June of this year at the latest."

The Gwangju Central Park District 1 Private Park Special Project is the largest private park development project in Gwangju, with a total project cost of 2.1 trillion KRW. The goal is to develop park and non-park facilities on a 2,435,027㎡ site in the Geumho, Hwajeong, and Pungam neighborhoods of Seo-gu, Gwangju. The private developer is required to build apartment complexes on part of the site to generate profit, while donating the remaining land as park space to the citizens. The non-park facility area will include apartment complexes consisting of 39 buildings ranging from three basement floors to 28 above-ground floors, totaling 2,772 units.

The project financing (PF) loan guaranteed by Lotte Construction is approaching its maturity date (the 25th of this month), and successfully extending the maturity is essential for the stable continuation of the project. A Lotte Construction official explained, "Since construction is already underway, the loan maturity extension condition of ‘starting construction before the maturity date’ has been met early on, but we are proceeding according to schedule to avoid any disadvantages caused by project delays."

The sale price will be decided through consultation with Gwangju city based on the price suggested by the Jeonnam National University Industry-Academic Cooperation Foundation, which conducted a feasibility study on the sale price at the city’s request (24.25 million KRW per 3.3㎡). However, Lotte Construction noted that the price may change during the approval process by the Housing and Urban Guarantee Corporation (HUG).

Hanyang: "The Project Should Be Reconsidered from the Beginning"

This project was originally participated in by mid-sized construction company Hanyang, not Lotte Construction. Hanyang has been actively seeking to regain construction rights due to disputes within the special purpose company (SPC) and is now insisting that the city government reconsider the project from the beginning.

Hanyang claimed that although it was the largest shareholder and the sole contractor of the SPC Bitgoeul Central Park Development, established in January 2020, the contractor was replaced by Lotte Construction in April of the following year by another shareholder, Woobin Industry. The SPC shareholders included Hanyang (30%), Woobin Industry (25%), K&GS Steel (24%), and Park M (21%). Subsequently, Woobin Industry secured non-Hanyang shares and began to lead the project, including contractor selection. Woobin Industry consistently disagreed with Hanyang over the sales method within the SPC. Hanyang filed a lawsuit for damages, claiming Woobin Industry violated a ‘special agreement among shareholders,’ and won the case, entitling Hanyang to receive Woobin Industry’s 25% stake. However, in the meantime, Woobin Industry transferred all its shares to Lotte Construction, leaving no shares for Hanyang to acquire. Hanyang accused Lotte Construction of committing financial fraud to nullify the court ruling. Hanyang then engaged in legal battles to regain contractor status for this project but lost at all levels, including the Supreme Court.

Hanyang also proposed a pre-sale price of 19.9 million KRW per pyeong (3.3㎡) for Central Park District 1, aiming to supply at a lower price than Lotte Construction by reducing construction costs, sales management expenses, and project implementation profits. Hanyang criticized the sale price calculated by the Jeonnam National University Industry-Academic Cooperation Foundation, commissioned by the city, as inflated to guarantee profits for a specific business operator. Hanyang stated, "The city, as the project management and supervision entity and joint implementer, is neglecting the situation and undermining the purpose of the public offering project," and proposed, "The project should be reconsidered from the beginning and a new agreement should be signed."

Regarding this, Lotte Construction said, "The SPC selected Lotte Construction as the contractor through procedures comprehensively considering construction capabilities," and added, "Hanyang should cease any further attempts to delay the project."

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