Blueprint of the Lotte World Tower and its surrounding “Lotte Shopping Town” in Jamsil, Seoul. Lotte Group
SEOUL/TOKYO -- When it comes to real estate, Lotte knows what it is talking about.
The company has been rocking the nation with a fierce family feud and a possibly illegal corporate structure, but in terms of property investment, it’s been at the top of its game.
In Korea, Lotte Group’s headquarters are nestled in one of the most expensive neighborhoods in the country -- Sogong-dong in central Seoul. The vast space housing the Lotte Hotel, Lotte Department Store, luxury-store Avenuel and Lotte Young Plaza -- a mid-level shopping center targeting younger consumers -- as well as their office buildings, is dubbed “Lotte Town.”
Lotte was one of the first Korean conglomerates to claim land in the area in the late 1970s. This strategic move helped Lotte become of the most property-rich companies here, as real estate prices skyrocketed over the years.
Today, land in the area that Lotte Hotel occupies in downtown Seoul is worth 48 million won to 49 million won ($41,000-$42,000) per square meter, making it the second priciest area among commercial districts in the country.
Another “Lotte Shopping Town” in the southeastern district of Jamsil is equally valuable.
About 383,470 square meters of the lower parts of the 123-story skyscraper Lotte World Tower and the Lotte World Mall is expected to be registered as the world’s fifth-largest global leasable floor space. Added to the Lotte Hotel, Lotte Department Store, Lotte World Amusement Park and the Lotte Castle Gold apartments, the total value of the place goes into the trillions of won, experts said.
Lotte’s Tokyo headquarters are also situated in one of the city’s most affluent metropolitan areas -- Nishi Shinjuku.
Just like Sogong-dong, which houses the head offices of many a conglomerate with a long legacy, Nishi Shijuku boasts the largest concentration of skyscrapers in Tokyo.
And some of the city’s tallest buildings, such as the Tokyo Metropolitan Government Building and Park Tower, are located here.
In addition to skyscrapers, the neighborhood is home to several well-known hotels, including the Park Hyatt, which has become especially well-known from the 2003 movie “Lost in Translation.”
Lotte Japan’s headquarters in Tokyo Wikipedia
How Lotte got ahead
While Lotte made quality property investments that helped it amass its fortune, it had a staunch ally in business: the government.
Sohn Jung-mok, honorary professor at the University of Seoul, said the Park Chung-hee government was eager to have Lotte invest in South Korea.
“Former President Park Chung-hee thought that if he could attract a portion of what Shin Kyuk-ho earns in Japan, it could benefit Korea’s economy. Park granted several tax exemption and more benefits to have Shin stay,” the former deputy major of Seoul told the press.
Such perks include the famous Lotte Hotel, situated at the site of the former Bando Hotel.
Established in 1938, Bando served as one of the trendiest places among political and business leaders. However, when it was auctioned in 1974, Lotte became the sole bidder and bought it for 4.2 billion won. In 1979, the 37-story Lotte Hotel opened.
The Seoul government also granted Lotte the ability to build a department store in Sogong-dong, where building department stores was prohibited. Thus, the mall was named “Lotte Shopping Center” instead of “Lotte Department Store.”
The famous Jamsil department store and hotel followed in 1988, and in 1997 Lotte opened Lotte Hotel Busan.
“It was widely understood that Lotte was favored in the urban development plan ahead of others. With Shin’s eye for good real estate, Lotte blossomed. Without the heavy industry and information technology part, Lotte has managed to crawl up to the country’s fifth-largest conglomerate position, all due to these factors,” a business insider said.
“But I wouldn’t say Lotte was fed without giving back. Lotte was clearly rich, and Shin Kyuk-ho was investing in Korea while he had better chances in Japan -- Lotte Japan’s business was larger than that of Korea until the 2000s. Therefore, it was of mutual benefit,” Sohn said.Good luck running out
Perhaps it was due to this allegedly corrupt past, but Sogong-dong has recently been spelling misfortune for not only Lotte, but many Korean companies that had been or are dwelling there.
Daenong Group, the operator of Midopa Department Store, fell in 1998. Lotte acquired the facility and opened Young Plaza in 2003.
Korea First Bank, which was headquartered nearby, was also sold to the U.S.-based New Bridge Capital in 1999 and became the only financial institution to have been sold to a foreign bank during the Asian economic meltdown starting in 1997.
Some say it may be perhaps that Sogong-dong is unfortunate, or cursed, in terms of corporate fortune.
“At the risk of sounding superstitious, it does seem that this piece of land, which is supposedly one of the priciest in Korea, has witnessed much bad luck for the firms residing there,” said one industry watcher who declined to be identified.
“Shin had great eyes for real estate, and business, which led to phenomenal success in both Korea and Japan. But now that he is involved in the fraternal dispute between his sons for the helm of Lotte, it may look as if his luck has run out,” another onlooker said.
The situation is in some ways similar for Lotte’s real estate in Japan.
Olympus Corp. has offices in the Nishi Shinjuku area and has been mired in an unprecedented corporate corruption scandal with its former chairman Tsuyoshi Kikukawa since 2011. McDonald’s, which has suffered one of its worst years in terms of sales, can also be found there.
By Kim Ji-hyun and Bae Ji-sook (firstname.lastname@example.org