EXIT IN SIGHT FOR KOREAN GIANT
Lotte to cut losses on dismal Gold Coast experience
GIANT Korean group Lotte is believed to be on the verge of wrapping up a dismal Gold Coast experience that could see it emerge from a sticky situation $200 million poorer.
The conglomerate, which got its start in the chewinggum business in Japan after World War II before setting up in Korea, has been struggling to sell off as one lot the undeveloped land at its Salacia Waters project at Paradise Point.
It’s now changed tack, quietly peeled off and sold two parcels, and appears to have a buyer in the wings for the major portion.
Lotte’s also making headway at its other Gold Coast exposure, the 220-unit Victoria Towers over-50s building in Southport. The number of unsold units has been pared back to little more than 40 and half a dozen sales have been achieved at $900,000 or above.
Lotte rolled into town with its money a decade ago but hasn’t had a lot of luck with “partners” at either Salacia Waters or Victoria Towers.
Its Salacia Waters partner departed suddenly in 2009 and in 2013 it took control, as mortgagee, of Victoria Towers.
One estimate, and it has emanated from Korea, is that all up its losses on the two developments could top $200 million.
Fortunately for Lotte, it’s big enough to wear such a hit – it employs more than 60,000 people in businesses that range from hotels to heavy chemicals, IT and publishing.
The Salacia Waters venture always was ambitious, given that $90.5 million was paid for the site in the boom before the GFC and that the project involved more than 460 apartments and villas and a resultant extended development time frame. Worked stopped on the site in 2011 with 144 apartments built and today, six years on, all but one show as sold.
The undeveloped waterfront land has been quietly on the market for three of four years, with listed groups Sunland and Villa World having unsuccessful runs at it.
Their offers didn’t match Lotte’s expectations of around $40 million. Subsequently, Lotte unobtrusively has sold a couple of pieces.
In January Ray White Runaway Bay principal Ali Mian, via company AMPD, paid $2.5 million for 1669sq m of the Salacia land. A fortnight ago $7.5 million was paid for just over a hectare at the entrance to Salacia and looking east to the Sovereign Islands.
There was a Mian connection there too – Amir, who specialises in Sovereign Islands homes, handled the sale.
The buyer is mooted to be the Keylin Group, which has undertaken the waterfront Park Cove estate at Hope Island and which is associated with Louis Cheung.
Now the balance of the Salacia land, well in excess of 4ha, is believed to have drawn a buyer but the deal, while close, apparently is not over the line.
The suggested price is in excess of $30 million, which means given the Ali and Keylin deals, Lotte could yet achieve its $40 million hopes.
THE SALACIA WATERS VENTURE ALWAYS WAS AMBITIOUS, GIVEN THAT $90.5 MILLION WAS PAID FOR THE SITE IN THE BOOM