The site of the Swiss Grand Hotel in Seoul's Hongeun-dong neighborhood, Seodaemun-gu, has finally been sold, setting in motion a redevelopment project that had drifted for years amid controversy over property linked to a pro-Japanese collaborator.
The project had long existed only as plans for a large apartment complex. It has now gained momentum on the back of major financing, though analysts say it remains uncertain whether the development will proceed smoothly given the unresolved historical dispute surrounding the land.
Ownership of the Swiss Grand Hotel building and its site was transferred to Hongje 353 PFV last month, according to investment banking sources on the 13th. The project, led by developer Yeonhap Y&J, involves demolishing about 12,000 pyeong (roughly 40,000 square meters) of land, including the hotel and surrounding lots, to build a 1,300-unit apartment complex with support facilities. The total purchase price and early project costs alone are said to reach 500 billion to 600 billion won ($328 million to $393 million).
Several developers had sought to buy and develop the Swiss Grand Hotel site since the early 2020s, but progress stalled as they struggled to secure financing. Permits are difficult to obtain in the area, and the symbolic stigma of "pro-Japanese collaborator property" dampened lender appetite.
The hotel and surrounding lots have been owned mostly by Lee Woo-young, chairman of Dongwon I&C, and corporations he runs. Lee's grandfather was Lee Hae-seung, a Joseon-era aristocrat regarded as a prominent pro-Japanese collaborator. As a result, historical and social disputes—including the question of reclaiming collaborator-era wealth for the state—have continued to follow the development. Controversy also persists over claims that most of the chairman's assets were inherited from his grandfather and built up over generations. The government did file a lawsuit against Lee seeking to reclaim land around Hongeun-dong for the state treasury, but lost the case at the Supreme Court in 2023.
The project, which had struggled to find a way forward, gained a turning point when Kiwoom Securities (039490.KS), a mainstream financial firm, provided large-scale financing. Kiwoom last month single-handedly provided a 450 billion won ($295 million) bridge loan, helping fund the balance of the purchase and early project costs. The financing terms are understood to carry an 18-month maturity and an all-in rate of 11% to 12% a year, including a floating rate of 6%. Kiwoom is expected to earn a considerable return from the bridge loan.
With the large financing in place, the early stages of the project are set to move quickly. The developer is expected to complete permitting procedures, convert to full project financing (PF), and aim to break ground as early as 2027.
Still, significant obstacles remain before the project reaches full swing. The historical controversy has recently resurfaced, driven by political circles and the local community, and the permitting process may not go smoothly. The site is currently zoned as a Class 2 general residential area, and building an apartment tower of 30 stories or more would require an upgrade to quasi-residential zoning—a process that could draw criticism of administrative favoritism. An investment banking source said, "The negative public sentiment that Lee's side, stigmatized as descendants of a pro-Japanese collaborator, is once again amassing enormous wealth through this development will also be a burden."
