Koramco Asset Management is pushing forward with a project to develop a long-term undeveloped business site near Suseo Station in Gangnam-gu, Seoul, into prime office space.
The project site is located at 197 Jagok-dong, Gangnam-gu, Seoul, within the Suseo Station Public Housing District B1-2BL, which is categorized as a mixed-use complex of business and retail. It is adjacent to subway lines 3, the Suseo-Bundang Line, and the GTX-A (Suseo-Dongtan) as well as SRT Suseo Station, making it a key transportation hub in the southeastern region, especially with the GTX-A (Seoul Station-Suseo) scheduled to open in the future.
The previous developer had planned to build and sell officetels on this site through development for land compensation, but due to soaring raw material costs and a slump in the real estate market, they did not even break ground, and the project came to a halt.
To normalize the business, Koramco established the ‘Koramco Suseo General Private Investment Trust No. 166’ fund and acquired long-term undeveloped project financing (PF) loans worth about 110 billion won through a subrogated compensation method. Currently, they are in the process of recruiting additional investors for pre-purchase or leasing demands, aiming to finalize the acquisition of business rights from the existing operator and to normalize the business through concluding the main PF contract and starting construction within the year.
Koramco has restructured its business model by converting the existing section office development, which was to be sold, into office-type prime space for continuous leasing to enhance the project's viability. This change is aligned with major development plans such as the Global Business Center (GBC) around the Samseong Station area, the Yongdong-daero Integrated Transfer Center, and the Jamsil MICE complex development, positioning this area as a primary beneficiary in the expansion of the Gangnam Business District (GBD).
According to the Information Memorandum, Koramco is focusing on the significantly reduced development costs of this project compared to adjacent developments within the Suseo Station mixed-use complex. Furthermore, most risks that could occur in the initial stage of development, such as land acquisition and permitting issues, as well as complex rights relationships, have already been resolved, which lowers the investment uncertainty, also being noted as an opportunity factor. Koramco is currently finishing up its work on changes to the business structure and design and plans to soon begin the selection of a construction company.
Koramco will also utilize the 'PF Project Normalization Support Fund' established by the Korea Asset Management Corporation (KAMCO) for this project. This fund was created to assist in normalizing underperforming PF projects that faced severe crises in 2023, with KAMCO investing 500 billion won and five entrusted asset managers (Shinhan Asset Management, EGIS Asset Management, Capstone Asset Management, KB Asset Management, and Koramco Asset Management) each raising over 100 billion won in private funds to form a total fund of 1 trillion won. It aims to stabilize the construction market by injecting capital into distressed projects that are at risk of being left idle, minimizing unnecessary social and economic expenses.
At the time of the fund's establishment, Koramco raised an additional 145 billion won in private funds, generating a total fund size of 245 billion won in addition to KAMCO's investment. Among the five entrusted asset managers, it formed the largest fund, demonstrating its ability to select projects and manage assets as a real estate specialist.
Kim Tae-won, vice president of Koramco Asset Management's domestic real estate division, said, “The office development project in Seongsu 2-ga last year and this Suseo office development project are examples of Koramco's ability to restructure development projects, contributing significantly to the normalization of the real estate development market by utilizing KAMCO's PF fund. We will pursue both local development and asset value enhancement for investors through the normalization of halted projects, fulfilling our responsibilities as a responsible asset management company.”