Site preparation continues on the Gold Tower project.
FINANCING for the Gold Tower 42 residential high-rise development is secure despite the impact of the global credit crunch on South Korea's financial system, the developer behind the controversial project said.
"[Financing] for my project is 100-percent complete," Nov Rattana, general manager of Yon Woo Cambodia, told Prime Location.
He refused to disclose financing details but confirmed when pressed that a key backer was South Korea's military pension fund. The Military Mutual Aid Association is one of Korea's largest pension funds with over $6.6 billion under management.
The assurance came after the South Korean government issued a statement last week urging banks to sell foreign assets in order to raise foreign currency for lending to domestic firms struggling to secure credit.
South Korea has been especially hard-hit by the global financial crisis. The South Korea won has tumbled 33 percent this year, hitting 10-year lows against the dollar on persisting dollar shortages.
Nov Rattana said the 42-storey, $240 million development at the corner of Monivong and Sihanouk boulevards was on schedule for completion by 2011. "The project will be completed on time because we promised the prime minister," he said. "If not complete on schedule, we also have to pay a penalty to our customers."
The company told the Post in May that it had already sold 75 percent of the residential units in the tower, which are priced from $459,000 to $1,500,000. Around 30 percent of buyers were from offshore, mostly from South Korea. Prime Location understands Yon Woo is now gearing up for another promotional sales blitz through the advertising agency Povicom, though Nov Rattana would not confirm details or provide up-to-date sales figures.
Gold Tower 42 has long been plagued by whispers claiming the development was in trouble. Rumours even made their way into the Khmer-language press earlier this year that Yon Woo Cambodia had abandoned construction, leaving depositors in limbo.
In May, when the rumours were at their peak, Yon Woo director Lee Sun Hum told the Post the project was like a slandered celebrity. "A rumour is only a rumour," he said. "Our company, being famous, must suffer from rumours created by others."
South Korea's financial problems have been exacerbated by record levels of investment by South Korean firms offshore and dwindling investment by foreign firms in the domestic market.
Data released by South Korea's central bank on October 5 showed a net foreign direct investment outflow of $9.66 billion in the first eight months of the year, almost double last year's $5.23 billion net outflow and the largest in the 28 years the Bank of Korea has been collecting data.
Only US$26 million in foreign direct investment flowed into the country over the period, just 1.5 percent of the $1.68 billion inflow for the same period a year earlier. FDI outflows by Korean investors amounted to $9.68 billion, up 40 percent from $6.88 billion a year earlier.
Union Commercial Bank CEO Yum Sui Sang said South Korean firms had long been encouraged by their government to invest in offshore property.
"Now there are restrictions on outflow," he said, adding that he had heard market rumours the South Korean government would announce new regulations concerning offshore investment financing in October.
Many Korean developers are already looking to buy smaller land blocks for projects costing $2-3 million, Yum Sui Sang said.