Gale International Korea: Creating Dynamic Environments
Could you give a brief background of your operations in Korea?
Gale International is one of the preeminent international real estate development companies in the world today. In 1999, the Korean government envisioned the creation of a Northeast Asia business hub, right here in Korea. They decided to designate Songdo as a free economic zone. This concept was brought to Gale International by the Korean government and domestic construction partner POSCO E&C. In short, we were asked to help choreograph the development of a world-class city, named Songdo International Business District (Songdo IBD) that would appeal to multinational companies.
After a thorough review, we decided to get involved because of Songdo IBD's geographic advantages, the ideal conditions to build a master-planned city, the government's determination to attract foreign investment, and the unparalleled dedication of the Korean workforce. Let me explain each of these in a bit more detail:
- Geographic advantage
The Incheon Bridge will be completed in August next year, connecting Songdo IBD to Incheon Airport, a mere 15-minute drive. From the airport, you will be able to reach over a third of the world's population within a 3.5 hour flight radius.
- Ideal conditions to build a designed city
Songdo IBD is being constructed on 1,500 acres of reclaimed land. Since we are building a city from scratch, we can provide a master planned city utilizing the most recent technologies architectural and sustainable design technologies.
- Korean government's determination
We value the government's vision and determination to create a hub of Northeast Asia. As promised, they have designated Songdo as a free economic zone, where tax benefits, one-stop services, and other incentives are provided to multinational companies. Without the proper incentives in place it will be difficult for Songdo IBD to compete with other highly desirable Asian hub cities.
- Dedicated Korean workforce
Korea's highly educated and hardworking labor force is a potent lure to draw multinational corporations to Songdo IBD. Currently, over 10,000 Koreans are working on Songdo IBD construction, and we find them so motivated and hardworking. More than 300,000 will work there every day when Songdo IBD is fully built out over the next five years.
What makes the Songdo IBD Project different to others?
Songdo IBD is rising on a blank canvas of reclaimed coastline. It enables us to develop an ideal city to live and work. We are seamlessly integrating commercial, residential, and quality of life amenities in a highly desirable location. Few cities in the world can compete with all living enhancements we're going to provide: Songdo International School, the Jack Nicklaus Golf Club Korea, US-style shopping mall, 100-acre central park, international hospital, hotels, art center, state of the art "Songdo Convensia" convention center and other cultural facilities. I believe this unparalleled quality of life makes Songdo IBD unique.
We are also building a truly sustainable and wired city utilizing new state of the art integrated sustainable design technologies.
Songdo IBD is accepted as a pilot project by the U.S. Green Building Council for its Leadership in Energy and Environmental Design for Neighborhood Development (LEED-ND). Songdo IBD is unusual in that it is seeking LEED-ND certification for an entire city and seeking LEED certification for each project. It is by far the largest LEED-ND project outside North America. Forty percent of the project space will be open green space. We will have a reduced carbon emission footprint versus typical cities of similar size by reducing potable water use, and by providing an extensive network of dedicated bicycle lanes.
Songdo IBD's leadership in sustainable development has been endorsed by the expert groups, having recently been named a winner of the first annual Sustainable Cities Award, sponsored jointly by the Financial Times and the Urban Land Institute. Other world-leading companies such as United Technologies, GE and Microsoft are partnering with us to provide most technologically advanced sustainable design products and technologies.
Utilizing cutting-edge technologies, Songdo IBD will provide residents with unprecedented convenience. Wireless Internet connection will be provided in every home, street and office buildings, and many other ideas and solutions to enhance the residents' lives are being developed with our partners LG CNS and Microsoft. This will be life-enhancing opt-in technology designed to enable a better quality of life in the city.
The Songdo IBD project can only succeed through the inclusion of many strategic partners. Our domestic co-development partner, POSCO E&C and world-leading experts such Morgan Stanley, Microsoft, United Technologies, GE, Kohn Pedersen Fox, Harvard Advisory Group, Taubman Centers, Korean Air, Shinhan Bank, and other Korean banks and companies are all contributing to ensure the project's success.
As the Co-Chairman of the EUCCK Real Estate Committee what are the Committee future plans?
The real estate committee functions quite well, our goal is to improve the communication with government authorities in order to assist foreign real estate companies as they begin to expand into new project opportunities here in Korea.
We hope to raise awareness of foreign real estate companies and provide them access to the Korean partners they need to thrive. To do this, we'll need to provide information on newest trends and stay abreast of emerging opportunity areas.
We also want to increase the number of committee members. We expect these committee members to become advocates for EUCCK activities and ambassadors for the organization as a whole.
We plan to provide more educational opportunities for our members and the public at large, like organizing international seminars to create a greater awareness of Korean real estate projects to the outside world.
How would you rate the Korean property market vis-a-vis its neighboring countries? What has to be improved?
For the three Central Business Districts (CBD) in Seoul, we know that demand is still high; companies will definitely begin to expand to areas such as Bundang and Songdo. This goes for both commercial and residential markets.
Also, I would say that the high demand is due to a lack of supply in the market with vacancy levels reaching nearly a fractional point (1% or less). Also, Korea has not been hit as hard by the credit crunch as other Asian markets, but is beginning to see banks tighten their lending restrictions and LTV ratios. Landlords still remain strong on rents and we expect them to stay this way until new product is delivered to the market in 2009 - 2010. I think the outlook for the Korean property market is stronger than some other Asian markets due to the high demand, and we do expect companies to begin to move outwards from the CBD's to find lower costs alternatives. We have seen cap rates begin to loosen in the CBD areas as well, which could stimulate activity.