[Edaily Marketin KIM SUNG-SOO Reporter] With the start of construction on the development project for Buildings 12 and 13 of the Najin Shopping Center in Yongsan, Seoul, attention is turning to Shinhan Seobu T&D REIT’s growth strategy. This is because sales from the pre-sale of high-end officetels alone are projected to reach approximately 520 billion won.

Under this project, the sponsor, Seobu T&D, is directly overseeing development, with a focus on maximizing development profits. Shinhan Seobu T&D REIT plans to gradually incorporate the properties into the REIT after completion in 2030, once the offices and retail spaces begin generating stable rental income. If this aligns with the chain of developments in the Yongsan Electronics Market area, a rise in real estate values across the entire district—beyond individual assets—can also be expected.
Construction Begins on

Buildings 12 and 13 of Najin Shopping Center… Mixed-Use Complex Featuring Office, Residential, and Commercial Facilities

According to the financial investment industry on the 16th, construction began on the 8th for the development project of Buildings 12 and 13 of the Najin Shopping Center in Yongsan-gu, Seoul, which is being led by Shinhan Seobu T&D REIT. The project secured 550 billion won in project financing (PF), with Shinhan Bank, Hana Bank, and the Korea Development Bank participating as senior lenders.

Shinhan Seobu T&D REIT is a real estate investment trust (REIT) established through a collaboration between its sponsor, the real estate development company Seobu T&D, and Shinhan REIT Management, the REIT’s asset management company (AMC). Shinhan REIT Management serves as the asset management company (AMC).

The REIT holds a portfolio that encompasses hotels, retail, and office properties. Key investment assets include: △ the mixed-use shopping mall “Incheon Square One”; △ the 5-star hotel “Grand Mercure Ambassador Hotel & Residence Seoul Yongsan” (Yongsan Grand Mercure); △ the office, hotel, and retail complex “Gwanghwamun G Tower”; and △ the 3-star hotel “Shilla Stay Mapo.”

The development projects currently being pursued directly by Seobu T&D are considered the key drivers of Shinhan Seobu T&D REIT’s growth. Previously, upon its listing in 2021, Shinhan Seobu T&D REIT announced a plan to continuously grow the REIT by developing land owned by Seobu T&D and incorporating it into the REIT, while also securing and adding high-quality assets from the market.

Seobu T&D is currently pursuing the following development projects: △ the Urban High-Tech Logistics Complex in Sinjeong-dong, Yangcheon-gu, Seoul; and △ the development of Buildings 12 and 13 of the Najin Shopping Center in Yongsan.

The Yongsan Najin Shopping Center Buildings 12 and 13 development project involves constructing a building with a total floor area of 73,161.33 square meters (approximately 22,131.30 pyeong) on a 6,026.60-square-meter site located at 2-8 Hangang-ro 3-ga, Yongsan-gu, Seoul. The project consists of △approximately 10,000 pyeong of office space, △approximately 10,000 pyeong of high-end officetels, and △approximately 2,000 pyeong of retail space.

Sales of the high-end officetel units are scheduled for November–December. The sale price for the officetel units is approximately 160 million won per 3.3 square meters (pyeong) of exclusive floor area. Ryu Tae-hwan, a construction and real estate analyst at Eugene Investment & Securities, estimates that sales revenue from this phase will reach approximately 520 billion won.

The strategy is to target high-end residential demand by introducing an infinity pool and hotel-style services exclusively for officetel residents. However, revenue is expected to be recognized over approximately 50 months, depending on the pre-sale rate and construction progress. The scheduled completion date is November 30, 2030.

Another key feature of the project is its development entity and revenue structure. Under this structure, the sponsor, Seobu T&D, is directly responsible for development, with a focus on maximizing development profits. Shinhan Seobu T&D REIT initially considered utilizing a “project REIT,” but ultimately decided to proceed with Seobu T&D handling the development on its own.

A “project REIT” is an investment structure that utilizes a real estate investment trust (REIT) from the real estate development stage onward to manage the entire process—from development and operation to sales. While a “project finance vehicle” (PFV) focuses primarily on sales and disposal after development, a “project REIT” focuses on maximizing returns through long-term holding and leasing after development, as well as through stock listings.

Since establishment and commencement are possible through simple notification rather than licensing, the process is faster and offers benefits such as △tax breaks on development profits △increased floor area ratio △and relaxed public contribution requirements.

However, utilizing a project REIT requires selling the land to the REIT. Shinhan Seobu T&D REIT determined that this process could partially dilute development profits. The company calculated that, since Seobu T&D acquired the site at a relatively low cost during the COVID-19 pandemic, it could realize greater capital gains through direct development.

Shinhan Seobu T&D REIT plans to gradually incorporate the office and retail spaces constructed through the development project into the REIT following their completion (November 30, 2030). However, the buildings will not be added to the REIT immediately upon completion. The company is leaning toward incorporating them only after leasing is stable and a foundation for generating revenue has been established.

The strategy is to secure development profits through the presale of officetels while simultaneously increasing long-term cash flow by incorporating rental assets.

Seobu T&D has invested 624.07224 billion won in this project, which amounts to 45% of its equity capital (1.38694584 trillion won). This investment amount includes construction costs, taxes and public charges, and financing costs; value-added tax is excluded. However, the investment amount and details of the new construction may change during the construction process.

Connecting Seoul Dragon City and Yongsan Station… Reorganizing as a Hub for AI and ICT Industries

The location is also considered a key competitive advantage of the project. The project site is situated directly in front of “Seoul Dragon City,” a large-scale hotel complex in Yongsan, Seoul.

Seoul Dragon City is connected by a bridge to Yongsan Station, a transfer hub for the Korea High-Speed Railway (KTX), Subway Line 1, and the Gyeongui–Jungang Line. Buildings 12 and 13 of the Najin Shopping Center are situated directly in front of Seoul Dragon City, allowing for direct access. As such, the project is expected to capitalize on both the accessibility of Yongsan Station and the demand from hotel guests.

Plans are also underway to include facilities such as a swimming pool in the low-rise retail section to attract hotel guests as part of the target customer base. The aim is not only to bring together office, residential, and retail spaces but also to enhance the competitiveness of the mixed-use complex by linking it with nearby hotels and the transportation network.

Furthermore, the project site is intertwined with the development project in the Yongsan Electronics Market area. The Yongsan Electronics Market surrounding the project site consists of, in order from the Wonhyo Bridge side: Electronics Land (Buildings 1–3), Wonhyo Market (Buildings 4–7), Najin Market (Buildings 10–20), and Seonin Market (Buildings 21–22).

The

Yongsan

Market grew into the nation’s largest electronics distribution hub in the 1990s alongside the widespread adoption of personal computers (PCs). However, since the 2000s, the commercial district’s vitality has significantly declined due to the expansion of online shopping, changes in the industrial structure, and aging facilities, resulting in an average vacancy rate exceeding 60%.

Consequently, there were growing calls to restructure the area’s economy, which had been centered on electronics distribution. In 2021, Seoul Mayor Oh Se-hoon presented a vision to develop Yongsan into the “Silicon Valley of Asia.”

Subsequently, in June 2023, the Seoul Metropolitan Government announced the “Linkage Strategy for the Yongsan International Business District and the Yongsan Electronics Market Area.” Through this, the city has been phased in development projects to transform the Yongsan Electronics Market—formerly centered on electronics distribution—into a hub for new industries based on artificial intelligence (AI) and information and communications technology (ICT), such as software and digital content.

The area around the Yongsan Electronics Market has been divided into 11 Special Planning Zones to facilitate phased development, and regulations on existing distribution and business facilities have been revised to allow for mixed-use development encompassing office, commercial, and residential spaces. Additionally, to encourage private-sector development, the city has eased public contribution requirements for projects that allocate at least 30% of their total floor area to new industries such as AI and ICT.

Building on this institutional foundation, development projects in each zone are progressing in phases. Currently, four zones—Special Planning Zones 4, 5, 7, and 10—have completed the building permit process. Zone 8 has completed the architectural review; Zone 6 has had its detailed development plan officially announced; and Zones 1 and 2 have completed the public notice period for residents to review their detailed development plans.

The Najin Shopping Center Blocks 12 and 13 development project, which recently broke ground, falls within Special Planning Zone 5.

The total gross floor area of the eight zones currently under development amounts to approximately 800,000 square meters. Each zone will feature AI- and ICT-based high-tech office facilities, along with retail, cultural, assembly, and sports facilities. Additionally, a mixed-use urban space combining business, industrial, and residential functions is planned.

The Seoul Metropolitan Government plans to construct bridges connecting buildings and an elevated public pedestrian walkway approximately 570 meters long running east-west to ensure that the 11 Special Planning Zones are seamlessly connected. Once development in the other zones is completed, it is expected that real estate values in the area will rise as a result of synergies with surrounding office and commercial facilities.

Whether the Najin Shopping Center development project can secure both strong sales results and stable leasing, leading to its inclusion in the Shinhan West T&D REIT, is expected to be the key to its future growth.

An official from the financial investment industry stated, “Although a large-scale supply of new office space is planned for Seoul’s Central Business District (CBD) in the future, Shinhan West T&D REIT intends to maintain its office development strategy based on its competitive location,” adding, “For the overall increase in the area’s value to translate into actual asset prices and rental income, the progress of projects in each zone and the securing of tenant demand must be supported.”