Magok Industrial Complex Lots Draw Few Bids, Putting SH's Profitability at Risk

31 of 33 Lots in Magok Industrial Complex Fail to Attract Bids

Loss Coverage for Rental Business Under Threat

High Interest Rates Dampen Investment Despite Low Prices

Seoul Housing and Urban Development Corporation (SH) has moved to sell mixed-use lots in the Magok General Industrial Complex in Gangseo-gu, Seoul, but most of them failed to attract bids, it has been confirmed. Despite prices below those of nearby properties, high interest rates have dampened investment and failed to draw interest from businesses. Concerns are growing that SH, whose financial health is already under strain from losses on loans for the Han River Bus project and other factors, could sink into a deeper deficit.

Hwang Sang-ha, president of the Seoul Housing and Urban Development Corporation (SH), delivers remarks at the corporation's launch and vision declaration ceremony in Gangnam-gu, Seoul, on July 11 last year. Yonhap News Agency.

According to industry sources on October 24, SH announced the sale of 33 mixed-use lots in the Magok Industrial Complex on September 8, but when applications closed on October 20, bids had been received for just two lots.

The mixed-use lots SH sought to offer comprise 33 parcels spanning 125,227 square meters, with a total sale price of approximately 943.5 billion won. The average asking price is about 7.56 million won per square meter, roughly half the market price in the surrounding area. The Magok Industrial Complex is a major high-tech industry and research and development (R&D) hub in southwestern Seoul, with excellent access to Gimpo International Airport as well as Yeouido and the Gangnam area.

SH had initially expected the lots to sell smoothly, but contrary to expectations, most failed to attract bids. A downturn in the property sale market and businesses' reduced capacity to invest are cited as the main reasons. As high interest rates and inflation have increased companies' financial burdens, they are understood to have become more cautious about acquiring new sites and expanding their businesses.

The concern is that the failed sale could add to SH's financial burden. To stabilize housing for lower-income residents, SH supplies public rental housing with deposits and rents below market rates. As a result, its rental housing business incurs losses of more than 400 billion won each year. Cumulative losses over the past five years alone have reached approximately 2.2571 trillion won.

SH has remained profitable by using a cross-subsidization model, covering these losses with revenue from projects such as land development and property sales. However, if asset sales falter amid an economic downturn, it will also be difficult to secure funds to cover the losses.

According to SH's financial statements, its operating profit fell sharply from 171.1 billion won in 2022 to 55.2 billion won in 2023. It rebounded to 132.8 billion won in 2024, but then fell again to 69.1 billion won in 2025, highlighting the volatility of its earnings.

SH's financial burden could grow further if sales of lots in the Yongsan International Business District are also delayed, while the sale of the mixed-use lots in the Magok Industrial Complex remains stalled. SH's disclosures show that it posted an operating loss of 164.4 billion won and a net loss of 69 billion won in the first half of 2026. On an annual basis, SH has reported profits every year since posting a loss in 2012.

Industry voices are calling for the Seoul Metropolitan Government to develop measures to cover SH's losses so that the corporation can operate its public rental housing business sustainably.

SH plans to review its supply plans and market conditions in light of the failed sale of the mixed-use lots.

An SH official said, "After reviewing the project plan again, we plan to consult with the industrial complex management authority and the Seoul Metropolitan Government," adding, "A new sale announcement is expected next year." Another official said, "Given the Magok Industrial Complex's good location, all the lots would have sold if the economy were strong, but the current market is challenging."

This content was produced with the assistance of AI translation services.