The Seoul Metropolitan Government announced on June 6 that it has proposed 467.1 billion won (some $383 million) for compensation for the purchase of the land (37,000 square meters) in Songhyeon-dong, Jongno-gu, Seoul, which is owned by Korean Air, saying it will turn the land into a cultural park.
Once the final purchase price is confirmed, the Seoul City plans to pay a 10% down payment to Korean Air next year and then pay the remaining amount in 2022.
However, Korean Air seems to be at a loss to the city's unilateral drive to build a park in the land. Korean Air, which is in a liquidity crisis as its sales plunged more than 80 percent due to a drop in the number of passengers following the COVID-19 outbreak, planned to sell the land by September and spend it for operating funds and debt payments.
It is hard for Korean Air to accept Seoul City's plan not to pay the purchase amount this year as the company needs immediate survival funds.
Furthermore, several buyers are reportedly interested in the public sale of the site, which is currently being promoted by the lead manager. "If there are many companies or institutions interested in the site, Korean Air can sell it at a higher price than the market price. Such a matter will deepen Hanjin Group's troubles," a business source said.
In addition, the Seoul City, which holds the right to license and permit, has declared that the land in Songhyeon-dong is not to be developed for other purposes other than cultural parks, making it difficult to sell the site normally. Korean Air, which is struggling with Seoul City's unilateral push to build a park, said on the same day that it will sell the park following proper procedures after reviewing it.
According to the real estate industry, the market price of the Songhyeon-dong site is estimated to be between 500 billion won ($410 million) and 600 billion won ($492 million). Korean Air is also known to have set the sale price at least 500 billion won. Korean Air had tried to build a seven-star Korean-style (hanok) hotel, but gave up its development plan due to the school health law banning the establishment of hotels around the school.
