SK Group set to buy landmark Seoul building for about $500 mn

South Korea’s second-largest conglomerate SK Group will be buying a landmark office building in a central business district of Seoul for around 600 billion won ($462 million), according to people with knowledge of the matter on Thursday.

SK REITS Management Co., an asset management arm of SK Group, recently decided to buy the 33-storey Jongno Tower from KB Asset Management Co. The estimated price is about 30% above the purchase price paid by KB Asset back in 2019.

SK Group has already leased 10 floors of the Jongno Tower to house its six companies since May 2021. Under the lease contract, SK Group was granted an option to buy the property ahead of other potential bidders.

“We have decided to exercise our call option, but nothing has been determined about when and how to buy it,” an SK REITS official told The Korea Economic Daily.

Jongno Tower is located diagonally across SK Group’s headquarter Seorin Building. SK REITS, wholly owned by the parent group, owns the Seorin Building and 116 gas stations operated by SK Energy Co.

The transaction for Seorin Building in 2021 marked the highest-ever per-unit price for a South Korean office deal. It was sold at 40 million won per 3.3 square meters, or one pyeong, the base unit of Korean area.

Based on Seorin Building’s value at the time, Jongno Tower might be valued at 730 billion won, or 20% higher than the estimated 600 billion won.

“Seorin Building’s value had increased sharply after it underwent renovations. But Jongno Tower will likely sell for a lower price in the 600 billion won range,” a real estate industry source said.

Both buildings are close to Jonggak Station on the Line 1 of the Seoul Subway.

TWLEVE FLOORS WITH EMPTY SPACES

Its unique facade makes Jongno Tower the most eye-catching office building in northern Seoul. Its top floor is floating above stories of empty spaces. With a floor area of 6.1 square meters, its 22nd to 33th floors are hollow.

It was built in 1999 by Samsung Life Insurance Co. on the site of South Korea’s first department store. It had been used as the head office of Samsung Securities Co. and National Tax Service’s Seoul office.

In 2016, Samsung sold the mixed-use building to IGIS Asset Management Co. for 384 billion won in 2016. Three years later, IGIS sold the property to KB Asset Management for 464 billion won.

The office tower was the topic of gossips by traditional geomancers, or those who practice Pungsu.

They said the building’s good energy had vanished through the hollow 22nd-33th floors. But the 26-storey Centropolice Building, built behind Jongno Tower in 2018, now helps the 33-story landmark tower keep its vital force, according to the Pungsu theorists.

Write to Ik-Hwan Kim and Jeong-Min Nam at lovepen@hankyung.com
Yeonhee Kim edited this article