After years of drifting, the Swiss Grand Hotel development project in Hongeun-dong, Seodaemun-gu, Seoul is being revived, with ownership of the hotel building and site transferred to a project financing vehicle (PFV).

According to investment banking industry sources on the 13th, ownership of the Swiss Grand Hotel building and site was finalized last month with the transfer from Lee Woo-young, chairman of Dongwon INC, and related entities to “Hongje 353 PFV.” A PFV is a special purpose company (SPC) established for a specific real estate development project.

The project, led by real estate developer Yeonhap Y&J, involves demolishing existing structures on an approximately 12,000-pyeong site—including the hotel and surrounding parcels—and constructing a large-scale apartment complex of roughly 1,300 units along with ancillary facilities.

The Swiss Grand Hotel site had been pursued by multiple developers for acquisition and development since early 2020, but the project failed to gain momentum for an extended period due to financing difficulties compounded by controversy over pro-Japanese collaborationist assets linked to Lee Hae-seung, a Joseon-era nobleman and the chairman’s grandfather.

The stalled project took a turn when Kiwoom Securities (039490) agreed to solely provide a bridge loan of approximately ₩450 billion (approximately $316.7 million) to cover the remaining land acquisition payments and initial project costs. Total land acquisition costs and initial project expenses are estimated at ₩500 billion to ₩600 billion (approximately $352 million to $422.2 million).

“We provided the bridge loan after a comprehensive review of the project’s viability and collateral value,” a Kiwoom Securities representative said. “We plan to continue monitoring the project’s progress, including permitting and conversion to permanent project financing.”

However, industry observers note that significant variables remain before development can be completed, as high-rise apartment development requires zoning upgrades and other permitting procedures, and the pro-Japanese collaborationist asset controversy could resurface at any time.

Project Overview

ItemDetailsLocationHongeun-dong, Seodaemun-gu, SeoulSite SizeApproximately 12,000 pyeongDevelopment PlanApproximately 1,300 apartment units and ancillary facilitiesDeveloperYeonhap Y&JOwnership Transferred ToHongje 353 PFVBridge Loan AmountApproximately ₩450 billion (Kiwoom Securities, sole provider)Estimated Total Project Cost₩500 billion–₩600 billion

Note: Site size and unit count are based on project plans and may change during the permitting process.

Remaining Hurdles

While the ownership transfer and large-scale financing have put the project back at the starting line, significant challenges remain before actual construction can begin. First, zoning upgrades and other permitting procedures are essential for high-rise apartment development. Additionally, the site’s historical background—namely the pro-Japanese collaborationist asset controversy—is viewed as a variable that could resurface at any point during the project’s progression.

Investment banking industry sources view the bridge loan provision as a clear turning point for the project, but they identify potential delays in the permitting stage and the conversion to permanent project financing as the most critical factors going forward.