Big conglomerates are scrabbling for land in the affluent Cheongdam area south of the Han River. Shinsegae Group owner Lee Myung-hee, its vice chairman Chung Yong-jin and vice president Chung Yoo-kyung own around 10 properties in the company's name, while Samsung Electronics chairman Lee Kun-hee and the conglomerate's clothing affiliate Cheil Industries have also bought three buildings in the area since 2008.
The buying spree has jacked up real estate prices even further in the posh neighborhood. Realtors have predicted since the early 2000s that the area would become an enclave for the rich with the opening of label stores like Cartier and Gucci. The acquisitions by the conglomerates have only added fuel to fire.
Realtor Park Jong-bok of Miso Consulting said, "Rumors spread five years ago that an upscale shopping enclave would be created, spearheaded by the chaebol business groups, which sent the price of a W6.5 billion building up overnight to W43 billion." (US$1=W1,122) "Many buildings saw their price tags triple over the last three years."
Shinsegae owns six buildings in the area whose total value has been appraised to be in the hundreds of billions. Another estate agent said, "Shinsegae bought commercial properties in the name of the owners as well as under corporate titles, and the result has been a continuous rise in property prices. In the end, they all ended up profiting."
In 2008, Lee Kun-hee apparently bought a three-story building in the area for W38 billion, two to three times higher than the market price at the time, but the building is now valued at more than W43 billion. Lee owns more than W100 billion worth of property there.
The chaebol families also earn handsome rental income. Lee Myung-hee's building across the street from the posh Galleria Department Store is home to luxury outdoor brand Moncler, while the building owned by her daughter Chung Yoo-kyung operates the high-priced clothing store "Boon the Shop." Business is booming. Nearby, Lee Kun-hee's building is home to a Tory Burch shop operated by Cheil Industries that takes up all three floors of the building.
A realtor in the area said the rent is W100 million a month plus a W1.2 billion security deposit. "It's a seller's market." Shinsegae and Samsung declined to comment on how much rental income the buildings generate.