Hyundai Motor Group will pay a record $10 billion for a 79,342 square metre (854,030 square foot) plot for its new headquarters in Seoul’s high-end Gangnam district, out-bidding Samsung Electronics and sparking investor concerns that it is wasting cash on trophy property.
Hyundai’s 10.55 trillion won ($10.14-billion) was more than triple the appraisal value, and also the highest price by far for a single piece of land in Asia since the global financial crisis, according to CBRE Research, topping the $3.6 billion paid last year by Hong Kong’s Sun Hung Kai Properties for a site in Shanghai.
Investors and analysts expressed alarm at the price at a time when it could be pouring money into higher dividends or more factories.
The news sent Hyundai Motor Co’s shares down by 9%, sister firm Kia Motors 7.8% and parts maker Hyundai Mobis Co, also in the bid group, 7.9%; the trio lost $8 billion in market value.
“The bid price is nonsense,” said Kim Sung-soo, a fund manager at LS Asset Management and an investor in all the three firms. “Even taking into account competition with Samsung, the bid price is excessive.” It will cost another $6 billion to develop the property.