Hyundai Motor Group is undergoing extended renegotiations with the Seoul Metropolitan Government regarding its new office building, the Global Business Complex (GBC). Hyundai has submitted a revised plan changing from a single 105-story building to three 54-story buildings and is reviewing the Seoul government's request for an increase in public contributions. Public contributions are amounts paid by project developers benefiting from regulatory relaxations for community development.
Hyundai Motor and the Seoul Metropolitan Government are in renegotiations over the design changes for the GBC in Samsung-dong. A negotiation coordination council made up of officials from both sides and five experts in various fields including urban planning, architecture, transportation, and environment has held several meetings since April, but a conclusion is expected to be reached no earlier than the end of the year.
Both sides have formed a certain level of consensus on the plan to lower the number of floors for the GBC, but they have not been able to narrow their differences regarding the scale of the increase in public contributions.
The Seoul Metropolitan Government holds the position that public contributions must be recalculated as the design plan has changed. It is known that the city is demanding a minimum of 2 trillion won in public contributions. The Seoul government elevated the land use designation from a residential area to general commercial use in three phases, based on the premise that Hyundai would build a high-rise landmark building, back in 2016. The floor area ratio was increased from 250% to 800%.
Hyundai agreed to pay 1.7 trillion won in public contributions in exchange for regulatory relief benefits, but to meet the Seoul government's demands, it must pay at least 300 billion won more. Changing the high-rise to a 50-story building reduces construction costs, but labor and material costs have surged in the meantime. The standard construction cost per square meter has increased by 31.3%, from 1.812 million won in 2017 to 2.38 million won this year.
An official from the Seoul Metropolitan Government noted, "Just because the number of floors has been reduced, it doesn’t mean we will unconditionally demand more money (in public contributions). Since the development plan has changed, there needs to be a discussion on how to interpret and apply the standards agreed upon in 2016," adding, "We would like to reassess whether the incentives provided at that time are still valid at this point." This official also mentioned, "Although we agreed to reflect the inflation over the years, it is difficult to pinpoint an exact conclusion date due to the variety of issues being negotiated concurrently."
Hyundai plans to complete all procedures related to the GBC by the end of this year, but uncertainties remain regarding the timing of construction resumption due to pending negotiations with the Seoul government and follow-up procedures such as the review by the Ministry of Land, Infrastructure and Transport's metropolitan planning committee. However, there are analyses suggesting that if the GBC project is delayed any further, it could increase the political burden on the Seoul Metropolitan Government and Gangnam District. Recently, as Seoul Mayor Oh Se-hoon hinted at seeking a third term, there are predictions that progress on the project may accelerate.
Hyundai has been pushing for the establishment of the GBC since purchasing the Samsung-dong site from the Korea Electric Power Corporation in 2014. Initially, it aimed to build a 105-story super-tall building but adjusted its direction to consist of three 54-story buildings due to internal and external environmental variables. In February last year, it submitted a revised plan with two 55-story buildings, but withdrew it due to opposition from the Seoul government.