Gale Plans $975 Million Project In South Korea
By HAE WON CHOI
Staff Reporter of THE WALL STREET JOURNAL
May 18, 2005; Page B8
SEOUL, South Korea -- An American real-estate company will build South Korea's tallest building, while another is negotiating to construct what could be Asia's biggest shopping mall as part of a larger plan to develop an entirely new city named New Songdo City about 30 miles from the border with North Korea.
Gale International, a New York-based property company, said it will spend about $975 million to develop four big office buildings, making it among the largest private commercial real-estate investments in Asia.
The Seoul government hopes that New Songdo City, located near the port of Inchon, will become part of a regional financial hub.
Gale joined with the construction arm of South Korean steelmaker Posco to start planning the new city in 2001. The entire project, Gale's first in Asia, is expected to take 10 years to complete and cost $25 billion.
Gale, part of closely held Gale Co., said construction will begin in January of the 65-story Asia Trade Tower and three other buildings. Plans for the tower, which will be South Korea's tallest building, include offices, hotel space and luxury residential units.
According to the developer, U.S. mall company Taubman Centers Inc. is negotiating to build a two-story, 1.5-million-square-foot, shopping center that Gale said will be Asia's biggest mall. Taubman itself wouldn't go that far. "We are continuing to evaluate our involvement in the project," said Barbara Baker, vice president for investor relations.
Other projects planned at the development include two international schools, a golf course and hospitals.
"We will be building what we call 'quality of life' amenities," said John B. Hynes III, president and chief executive of Gale. "The city will provide alternatives that were never available in places like Shanghai, Hong Kong, and Singapore."
The South Korean government is hoping that New Songdo City, an island of 1,500 acres of reclaimed land west of Seoul, will become a regional hub for Northeast Asia. The island is designated as a free economic zone, offering tax breaks to businesses. The government believes Korea's skill base and strong technology infrastructure, coupled with the city's proximity to Seoul's international airport, will attract foreign investors.
It remains to be seen whether the plan can succeed. "I question just how much interest there will be in Songdo City," said Chang Jae Chul, an economist at the Samsung Economic Research Institute, a private think tank in Seoul. "International schools and medical centers will probably improve the living conditions for people living in the city, but I don't know those amenities would be enough to actually create demand." |
