Separate real estate PF explosion in Logistics Warehouse

A ‘warning light’ was turned on in the logistics center development project, known as ‘the goose that lays golden eggs’ and ‘logistics lottery’, and it caused investment craze. New construction projects have been stopped one after another, and the number of businesses facing bankruptcy due to non-payment of loans is increasing rapidly. This is the result of a combination of high interest rates and overinvestment. There is growing concern that the spark of business insolvency will spread not only to banks and securities, but also to the entire financial sector, including savings and capital banks, as the total number of loans from logistics center collateral project finance (PF) alone amounting to several trillion won.

According to JLL Korea, a global real estate service company on the 20th, 15 of the 55 new logistics centers with a total floor area of ​​33,000 square meters (10,000 pyeong) or more were confirmed to be completed within this year, there have been delays in 15 business sites (27.2%), such as construction delays. The total floor area of ​​the 15 business premises alone is equivalent to 1,421,487 square meters (430,000 pyeong). Considering that they borrowed 3.5 to 4.5 million won per 3.3 square meters for real estate PF, at least 1.9 trillion won or more are at risk of being converted into bad loans. The industry understands that even in distribution centers under 33,000 square meters, there are about 20 places where construction has stopped, and that loans amount to several trillion. The development of the logistics center was highlighted as a ‘100-fold project’ because it could be started even with a 10% down payment.

There are two reasons why the logistics center development project, which sucked up investment like a black hole, quickly went bankrupt. First of all, construction costs increased by 40% compared to last year due to an increase in raw material prices. Additional loans are needed to complete the project, but financial companies have closed their wallets in battle. An official from the securities industry said, “Business viability has decreased significantly due to the increase in the interest rate, making it difficult to obtain additional loans.

Carefully completed work sites also struggle to find tenants. Logistics centers typically fill 80% of tenants upon completion, and then sell all to recoup the investment. However, as the supply of logistics centers has increased in a short period of time, demand has not been able to keep up. Coupang and Market Kurly, the ‘big hand’ who seemed to buy as soon as they built, were also affected by recent restrictions on expansion. “I can no longer afford to pay 500 million won in interest per month,” said a developer company representative.

By Jang Kang-ho/Kim Woo-seop, staff reporter callme@hankyung.com

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.