The move hopes to cash in on one of the world’s rapidly-rising commercial property markets.
The US private equity firm will invest along with South Korea’s National Pension Service and IGIS Asset Management—which happens to be the country’s biggest real estate fund manager, stated KKR in a statement.
The project will include office space, retail space, and a five-star hotel– with a gross floor area of 239,188 sq m (2.6 mn sq ft), said the statement.
The total cost of the project is expected to be about $1.9bn—and includes the purchase price paid by the group alongside other costs, said KKR. This project will be KKR’s biggest real estate investment in South Korea, stated a spokeswoman for the firm who declined to be named.
Seoul’s affluent southern Gangnam district gained worldwide fame thanks to the famous video for ‘Gangnam Style’ by South Korean pop star Psy. The area of the South Korean capital is home to one of the major offices of Samsung Group. The company agreed in September to sell the building for $660mn.
Hyundai Motor Group is all set to also build its new headquarters in Gangnam.
Investors spent $10.4 bn on office assets in Seoul in the 12 months through June 2018—this make it second only to Hong Kong in the Asia-Pacific region, according to a report by Real Capital Analytic.
Seoul registered the fifth-fastest price growth of major global markets in the second quarter, with commercial property prices rising by 7.8% YoY, according to the report released this month.
KKR in January sold a prime office complex in central Seoul, which it had initially bought in 2014. KKR did not release the price, but real estate services firm Cushman & Wakefield said that the deal was priced at $24,794 per pyeong (3.3 sq m), a record high for an office building.