(For more retail coverage, click GlobeSt.com/RETAIL.)
INCHEON, SOUTH KOREA-Work begins here this week on $1.2 billion of projects for New Songdo City, a $25-billion, 1,500-acre reclamation project that is being called the largest private real estate venture in history. The development is a 70-30 joint venture partnership between New York City-based Gale International and POSCO E&C, a subsidiary of Korean steel giant Posco. Morgan Stanley is also providing funding for the project.
Gale International president John Hynes tells GlobeSt.com that by the end of the year some $9.3 billion worth of development will be under way including 11 commercial projects, nine residential projects and five infrastructure projects. Included in the mix is a 7.4-mile bridge that will connect New Songdo City to Incheon International Airport, an international school for 2,000 students and the first phase of residential, for which $1 billion of apartments were sold the first day they were made available.
The city eventually will include 50 million sf of office space, 30 million sf of residential space, 10 million sf of retail, five million sf of hotel space and 10 million sf of public space. Public amenities will include the central park, an art museum, a full-service hospital, an international school and a golf course, among other things.
The projects getting under way this week include the Northeast Asia Trade Tower, the city's $500-million, 65-story signature commercial building; the $100-million, 300-room Convention Center Hotel; a $200-million, 100-acre central park with underground parking and the $400-million first phase of the residential development, which is already sold out. Completion is slated for 2009.
Hynes says the overall development's expected internal rate of return to investors is in the 20% to 30% range over a five-year hold, three to build and two to stabilize. "If investors didn't think we could accomplish it we wouldn't have secured the funding," he says. "We're confident we can get there."
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