HDC Aims at
Diversification of Business

Hyundai Development to expand non-construction sector to spread risks

Chairman Chung Mong-kyu of Hyundai Development Co. said, in his New Year's press conference, that the company will focus on boosting its non-construction sector business to 40 percent of the group's total turnover.
He also said the group will make an all-out effort to participate in the Seoul-Busan Grand Canal project, despite the plan by the five top construction companies, led by Hyundai Construction, to form a consortium to undertake the great project. He said no concrete plan for the projected canal has been drawn up yet, but he thinks the project will be profitable, adding that it is rather unusual for the five largest builders to form a consortium as it seems to go against common sense.
Chung said the group plans to diversify its business lines to non-construction sectors because the construction business is very susceptible to market trends, especially in the residential housing sector. He said a number of homebuilders went belly-up lately, including Woosung, Woobang and Chungku,
unable to withstand the sluggish residential housing market.
He said when he took over the company nine years ago that its business consisted of 100 percent construction, 90 percent of which was for residential housing. The company will not reduce its exposure to the sector intentionally, but will try to expand into non-construction areas. The company will entertain M&As in this regard.
The chairman said when the company took over Youngchang Music Instrument in 2006, he thought that it would take about five years to turn it around. But the new company turned a profit in less than two years'time. He said he is looking for a company that can be turned around in 5 to 10 years as a takeover target.
Chung said he is also interested in taking over a government-invested firm when the government decides to privatize it, preferring a company in the areas of energy, water, power generation, railroad and expressways.
The chairman, however, seemed the most interested in the I'park Complex that will go on sale from Jan. 21, including a hotel, office, and shopping malls in addition to 1,631 apartment units, located in Haeundae, Busan. The project has been drawing attention around the country as the price of a penthouse in the complex will be the highest in the country at 45 million won per 3.3 square meters (one pyeong), along with the scenic view surrounding the site. The company will own the hotel and let a world-famous hotel chain run it.
The chairman said the seaside city where the I'park will be located will show a new model of a leisure-type residential town by the sea with a great future value. He said if I'park in the Gangnam area in Seoul is the top residential complex in the capital city, the I'park in Haeundae will be the top one in Busan and South Gyeongsang Province, good enough to be a landmark of the region.
If the venture in Haeundae is successful, he plans to export the leisure and residential facility model to a foreign country, with details of the project to be completed by the second half, he said. nw

HDC Chairman Chung Mong-kyu.

An inerior of I'park luxury apartment in Haeundae, Busan, one of the most ambitious projects by HDC.