Hanwha Galleria is fostering real estate development as a new growth axis alongside its department store business. Kim Dong-sun, vice president and head of future vision at Hanwha Vision and third son of Hanwha Group Chairman Kim Seung-youn, is accelerating the reshaping of the business portfolio as he embarks on independent management centered on Hanwha Galleria in August.
According to industry sources Tuesday, Hanwha Galleria has set an internal policy to expand its operations—which had been limited to acquiring and holding real estate—into a full-fledged asset development business. Hanwha Galleria has operated a real estate investment task force (TF) for about two years, and is recently accelerating commercialization by reviewing a plan to expand it into a formal business organization. One source familiar with the matter said, “Within Hanwha’s life division, there is a consensus that the real estate acquisitions pursued at the TF level should be connected to an asset development business going forward.”
Hanwha Galleria has been securing real estate and building sites in major Seoul commercial districts one after another. On the 24th of this month, it signed a memorandum of understanding (MOU) to acquire the Soonhwa Building and its land in Soonhwa-dong, Jung-gu, Seoul, for 213.5 billion won. In February last year, it purchased H Square and its site in Seogyo-dong, Mapo-gu, for 87.5 billion won. Earlier, in April 2023, it acquired a site and building in Sinsa-dong, Gangnam-gu, held by Chorokbaem Company for 89.5 billion won, and in December of the same year purchased a site in Cheongdam-dong owned by AS Development Co. for 22.5 billion won. In particular, the Soonhwa Building acquisition is larger in scale than previous real estate purchases, and is interpreted as a signal that Hanwha Galleria’s expansion into the asset development business is beginning in earnest.
This move by Hanwha Galleria is interpreted as connected to Vice President Kim’s business vision following his independent management. Hanwha Group plans to launch a newly established holding company, Hanwha Machinery & Service Holdings, through a spin-off on Aug. 1. Under the holding company will be incorporated tech affiliates that Kim has overseen—Hanwha Vision, Hanwha Momentum, Hanwha Semitech, and Hanwha Robotics—along with life affiliates including Hanwha Galleria, Hanwha Hotels & Resorts, and Ourhome.
With Hanwha Vision expected to serve as the central axis in the tech division and Hanwha Galleria in the life division, Hanwha Galleria is projected to make asset development a new growth engine. As there are limits to external growth through the department store business alone, the plan is read as one to generate synergy by linking real estate assets secured in major commercial districts with the retail business.
A view of the luxury hall at Galleria Department Store in Apgujeong-dong, Gangnam-gu, Seoul.
Major retail groups have already built portfolios combining real estate development and asset management functions based on their department store businesses. Lotte operates large-scale mixed-use development projects such as the Lotte World Tower and Mall in Jamsil through Lotte Department Store and Lotte E&C, while Shinsegae has expanded mixed-use shopping mall development projects such as Starfield, led by Shinsegae Department Store, E-mart, and Shinsegae Property.
The life division under Hanwha Machinery & Service Holdings is also assessed as having the capacity to build mixed-use commercial facilities, as it owns department stores and hotels. If an asset development business is added, it could generate synergy that drives asset value appreciation beyond capital gains.
Kim Young-hoon, CEO of Hanwha Galleria, also stressed at the shareholders’ meeting in March this year, “We will carefully review various investment opportunities, including new businesses and real estate development, to establish a mid- to long-term growth foundation.” Hanwha Galleria’s recruitment of Koo Yong-chan, an executive vice president and real estate development expert, early this year is also known to be aimed at assigning him real estate investment work as part of new business efforts, along with the reconstruction of the luxury hall at Seoul’s Galleria Department Store.
An industry official said, “Since the department store business places importance on prime locations and space planning capabilities, there is significant room to combine it with the real estate development business,” adding, “It appears that Hanwha Galleria, by securing assets in major commercial districts, intends to grow asset development as one axis of its independent growth strategy after the corporate separation.”