[credit provider=”Jung Yeon-Je/AFP”]
A $28 billion real estate project in Seoul was facing collapse after developers acknowledged defaulting on a major loan repayment.Yongsan Development Corp. (YDC) missed a Wednesday deadline to pay 5.9 billion won ($5.4 million dollars) in interest on asset-backed commercial paper worth 200 billion won.
“We’ve got into difficulties in raising funds due to the protracted real estate slump,” a YDC spokeswoman told AFP.
The 31-trillion-won “Dream Hub” project, aims to develop a 56 hectare (138 acre) plot in central Seoul into a modern business hub, with shopping malls, hotels, department stores and apartment blocks, as well as a landmark 111-story tower.
South Korea’s largest real estate project was first mooted back in 2006, but has faced numerous delays due to a funding dispute and a prolonged slump in the local property market following the 2008 global financial crisis.
One of the biggest shareholders in the consortium behind the development is the state-run rail operator KORAIL.
Whether the project will go bankrupt or not will most likely be decided in June when loans and commercial papers worth a total of 2.4 trillion won mature.
Copyright (2013) AFP. All rights reserved.