Well, they seemed like good ideas at the time. The world’s second-tallest building; a $20bn combined park, riverside marina and downtown property redevelopment; a robot-based theme park.
Now, alas, reality has struck. South Korea’s property dreamers are plummeting to earth as pie-in-the sky skyscrapers and other whacky developments face the axe of evaporating project finance, or PF.
For decades, Seoul was a desert of nondescript architecture and drab urban spaces. The game changed when then mayor, now president Lee Myung-bak tore down a kilometres-long overpass and rejuvenated an ancient downtown stream, Cheonggyecheon, in 2005. It was hailed globally as a benchmark of urban renewal.
Lee’s mayoral successor, Oh Se-hoon, made design central to his administration. The city has opened a new downtown plaza, is building a huge mixed-use complex in Yeouido, Seoul’s financial district, raising a Zaha Hadid-designed complex in eastern Seoul, and finalising a trio of floating islands in the city’s Han River.
With the public sector sexing up the city, the private sector got the message. Result? Korean newspapers of the past five years have been overflowing with fantastical property schemes.
The stories are different today. Although South Korea’s economy was uninfected by the sub-prime contagion, in the wake of the global financial crisis property PF has dried up, with the result that major projects are not even escaping the drawing board.
“The Yongsan development project is going to create something as rich as the history of Seoul,” enthused architect Daniel Libeskind in 2009, of a $20bn inner-city redevelopment. Now, a Samsung-led consortium has pulled out, leaving the development’s future in limbo. Fifteen kilometres across town, a mooted “world’s second-tallest building” in hi-tech cluster Sangam Digital Media City is in indefinite suspension.
Seoul satellite cities mirror the trend. A planned tower in the port of Incheon has been chopped from 151 stories to 102; a mooted “robot-theme park” is going nowhere. And a 150-storey tower at the KINTEX conference centre in Ilsan has been totally nixed.
“It’s partly psychological, partly because Korea is not lending, partly because PF comes from domestic banks only, so the pool can dry up,” says Dan Grover, a director at Asia-Pacific property developer Skylan. “I think the more outlandish projects will go through restructuring in different ways in terms of finance and target markets.”
The fault lies not simply with finance, but also with crafty developers and a naive media, which raised expectations by painting trial balloons as done deals.
“There is a tendency to announce plans and float balloons as part of a strategy to get people onboard, so the announcement is almost an attempt at manipulation,” said Mike Breen, head of local PR agency Insight Communications. “Media is not sufficiently critical of grandiose plans at the time of announcement.”