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Hyundai's $11.2 Billion Property Buy Drives Investor Backlash Photo:
 
 
Trevor Collett | Sep, 22 2014 | 0 Comments

Hyundai’s investors are reportedly displeased over the carmaker’s decision to spend AU$11.2 billion on a ‘trophy property’, following a bidding war with fellow Korean company Samsung Electronics.

The prime real estate is located in Seoul’s Gangnam district; considered by Koreans to be an upmarket area in the capital city, south of the Han River.

Hyundai intends to use the purchase for its new global headquarters, but investors are more concerned with the record-breaking price.

Reuters reports that CBRE Research declared a AU$4 billion purchase made last year by a Hong Kong company for a property in Shanghai was the highest amount paid for an Asian property since the global financial crisis.

But Hyundai has now smashed that record, paying almost three times that amount for its new HQ which was reportedly triple the property’s appraisal value.

While investors expressed concern over the high purchase price, Hyundai’s announcement that a hotel and car-based theme park are also planned for the site may restore some of their confidence.

One such investor is LS Asset Management, with company spokesperson Kim Sung-soo telling Reuters a further AU$6.7 billion would be needed to develop the site.

The record-breaking purchase wasn’t lost on the stock market either, with Hyundai shares falling nine percent following the announcement - their biggest drop in three years.

Sister carmaker Kia also felt the effect, falling 7.8 percent, meaning a combined loss of almost AU$9 billion in market value.

Further details on the new combined HQ, hotel and theme park are yet to emerge, but the theme park is believed to follow the lead from similar attractions at Volkswagen’s and BMW’s HQ.

MORE: Hyundai News and Reviews

 
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