Plans for a smart city in South Korea are not looking good in the wake of a feud between investment and development firm Gale International and construction company Posco Engineering.
The two had been planning a city known as Songdo International Business District across 1,500 acres of land near Seoul, according to the Wall Street Journal. The development would have included 15,000 apartments, a convention center, a golf course, canals and a park modeled on Central Park.
The companies, however, have built less than half of the office space they planned, and the office space that does exist has a vacancy rate higher than 30 percent. New construction on the development from South Korea-based Posco has now come to a halt.
Tension between the two companies came to a head last year when Posco sold Gale’s majority share to a pair of Hong Kong companies, after which Gale sued Posco, claiming the firm improperly sold the stake in the project and overcharged their partnership by more than $300 million.
On Monday, Gale filed a notice of claim for more than $2 billion against South Korea with the International Centre for Settlement of Investment Disputes, claiming that the government “expropriated” a significant amount of its investment.
Although Gale is also known for its Flatiron condo project at 21 West 20th Street and Boston’s State Street Financial Center, Songdo was its claim to fame, and chief executive Stanley Gale told the Journal that the company has only recovered “a pittance” of its $50 million investment.
“They couldn’t get rid of us legally,” he said, “so they invaded our offices, kicked people out and decided to take the shares and deal with the consequences later.” [WSJ] – Eddie Small