Coramco Asset Management signed a memorandum of understanding last month to acquire and redevelop the Dongkyung and Sangkyung Buildings near Gangnam Station, with procedures set to begin in September. The twin buildings will be transformed into a single complex spanning 7 basement to 24 above-ground floors with 12,390 pyeong (40,887 m²) total floor area, incorporating office and tourist accommodation facilities. The redevelopment follows sustained rental increases in Seoul's Gangnam Business District (GBD), where Q2 average rent reached 136,200 won per 3.3m², exceeding the Central Business District (CBD) rate of 135,200 won for the first time since Savills Korea began analysis in 1997.
Coramco Establishes Project REIT for Integrated Development
Coramco Asset Management formed an acquisition consortium last month and entered into the business agreement with the sellers for redevelopment purposes, subsequently commencing investor recruitment. The asset manager secured initial investment from both financial investors (FI) and strategic investors (SI) with strong interest in the GBD area.
Coramco plans to finalize the contract with the sellers as early as next month and establish a project REIT. The transaction is scheduled for closure in September, at which point the integrated redevelopment procedures for the Dongkyung and Sangkyung Buildings will commence.
Development Plan Includes Office and Tourist Accommodation
The redevelopment will create a structure with 7 basement floors and 24 above-ground floors, totaling 12,390 pyeong (40,887 m²) in floor area. Rather than a simple office facility, the plan incorporates tourist accommodation facilities into a mixed-use building. The inclusion of lodging facilities reflects both GBD rental rate growth and increased foreign tourist numbers driven by the expansion of the Korean Wave.
GBD Rental Rates Surpass CBD for First Time Since 1997
According to commercial real estate services firm Savills Korea, the average nominal rent for GBD prime offices in Q2 was recorded at 136,200 won per 3.3m². This figure stands 1,000 won higher than the CBD rent of 135,200 won. This marks the first time the two districts' rental rates have reversed since Savills Korea began analyzing the Seoul office market in 1997.
Twin Buildings Completed in 1986 and 1991 to Undergo 40-Year Transformation
The Dongkyung and Sangkyung Buildings, along with LG Twin Towers (formerly Lucky Goldstar Twin Towers) in Yeouido, Seoul, are considered pioneers of the twin building concept. Twin buildings became popular starting in the 1980s because having two buildings in one area provides significant promotional effects by serving as regional landmarks, while also avoiding height adjustments required by building code diagonal restrictions based on road width.
With Coramco's redevelopment, the Dongkyung and Sangkyung Buildings will be reborn after 40 years. Sangkyung Building was completed in 1986, while Dongkyung Building received usage approval in 1991. The two offices have similar floor areas of 2,880 pyeong and 2,975 pyeong respectively.
Buildings Located One-Minute Walk from Gangnam Station
The Dongkyung and Sangkyung Buildings are positioned on Teheran-ro boulevard, a one-minute walk from Gangnam Station, a transfer point for Line 2 and the Shinbundang Line. The location simultaneously secures abundant foot traffic and stable tenant demand in the heart of the GBD. An investment banking industry official stated, "Investor preference is shifting from the CBD area, which faces oversupply concerns, to the GBD area," adding, "Once the integrated redevelopment is complete, it is expected to become an asset symbolizing the GBD."
FAQ
Q: When will Coramco Asset Management begin redevelopment procedures for the Dongkyung and Sangkyung Buildings?
A: Coramco signed a memorandum of understanding with the sellers last month. The company plans to finalize the contract as early as next month, establish a project REIT, and commence redevelopment procedures in September following transaction closure.
Q: What are the specifications of the planned integrated building?
A: The redevelopment will create a structure with 7 basement floors and 24 above-ground floors, totaling 12,390 pyeong (40,887 m²) in floor area. The building will incorporate both office and tourist accommodation facilities as a mixed-use complex.
Q: How do GBD rental rates compare to CBD rates?
A: According to Savills Korea, Q2 GBD prime office average nominal rent reached 136,200 won per 3.3m², exceeding the CBD rate of 135,200 won by 1,000 won. This represents the first rental rate reversal between the two districts since Savills Korea began market analysis in 1997.
