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The country's largest-ever property development project drew oohs and ahs when it was on the
drawing board a few years ago.
But now the Seoul Dreamhub project in Yongsan teeters on the brink of collapse.
A funding dispute and a prolonged property slump may be to blame in this case but as
our economics correspondent Kim Han-ul tells us this 29 billion dollar project is not the
only one that is in trouble.
It was to be the largest urban development project in Korea's history.
The 29 billion-dollar project was aimed at turning Seoul's Yongsan district into an international
business hub.
When the project was first announced in 2007, the developers said the district would create
more than 300-thousand jobs and generate 60 billion U.S. dollar in revenue.
But today, the development area is a ghost town.
Businesses have closed and realty offices are empty, this after the government banned
the renovation or sale of properties in the development area.
"Residents have put up flyers like these calling for an end to the project and demanding compensation
from the Seoul city government."
There are some residents who want the project to continue, but most want the project scrapped
and the ban lifted so they can carry on with their lives.
"Life is not going smoothly or normally for the people who live here. We can go back to
our normal lives once the ban is lifted."
Yongsan is not the only project under the risk of deep financial problems.
According to Korea's land ministry, there are 28 of these large property projects in
progress throughout the nation.
All of them have one thing in common they are based on a project financing structure,
which involves long-term loans based on projected cashflows, rather than the current financial
state of its sponsors.
"Developers thought there were enough profits in these projects. But after the 2008 crisis,
everything became very unstable and these projects now come with huge risk."
And with the uncertain outlook on the Korean property market, experts believe more of these
high-risk, high-return development ventures are vulnerable to financial problems.
Kim Han-ul, Arirang News.