Kim Dong-sun bets on real estate as Hanwha Galleria eyes Daejeon exit, Apgujeong overhaul

Kim Dong-sun, the third son of Hanwha Group Chairman Kim Seung-youn and president of Hanwha Machinery & Services Holdings (Hanwha M&S), is accelerating a sweeping restructuring of the conglomerate's lifestyle businesses — spanning department stores and hotels — with a growing emphasis on real estate development.

Industry sources said Wednesday that Hanwha Galleria, the retail arm of Hanwha M&S, is moving to sell its Daejeon Timeworld store by divesting its entire 100 percent stake in Hanwha Galleria Timeworld. The company is in detailed talks with Lotte Shopping, operator of Lotte Department Store, over the terms of a share purchase agreement. Lotte Department Store currently operates its Daejeon location in a leased building about 1.6 kilometers from Galleria Timeworld.

Hanwha Galleria recently informed employees of the planned transfer through internal briefings and the labor union. As concerns over job security mounted, the company arranged separate talks with the union to address the issue and is taking steps to ensure a smooth sale process. About 190 employees currently work at the Timeworld store.

A union official said the collective bargaining agreement requires management to consult the union at least 60 days before any merger or sale, adding that a share transfer agreement could be signed in November. Hanwha Galleria, however, said "nothing has been decided."

Galleria Timeworld posted sales of 603.2 billion won ($446 million) last year, a 3.6 percent decline from the previous year — a contrast to nearby Shinsegae and Lotte department stores, which continued to grow. Across Hanwha Galleria's network, every location outside the flagship Apgujeong luxury mall — which exceeded 1 trillion won in sales last year — posted a decline: Gwanggyo was down 0.1 percent, Cheonan Center City fell 7.0 percent, and Jinju dropped 5.7 percent.

The decision to sell Timeworld reflects a "focus and select" strategy of shedding underperforming stores to channel resources into stronger locations and property development. Hanwha Galleria Timeworld's total assets stood at 284.1 billion won at the end of last year, and a full stake sale is expected to bring in hundreds of billions of won.

The proceeds would also ease the financial burden of a seven-year renovation of the Apgujeong luxury mall set to begin next year, a project estimated to cost around 900 billion won. Hanwha Galleria established a real estate development subsidiary last month and is pursuing a high-end residential project on a site in Sinsa-dong, Gangnam-gu, Seoul, acquired through a public auction for 236.7 billion won. The company is also reviewing how to use a building and land in Sunhwa-dong, Jung-gu, Seoul, acquired in June for 213.5 billion won.

Hanwha Hotels & Resorts, another pillar of Hanwha M&S, will suspend operations at The Plaza hotel on Sept. 30 and begin a three-year renovation. The hotel plans to reopen as a seven-star high-end property, upgrading its rooms and common areas to target global VIP guests and bringing in world-class fine-dining offerings.

The renovation is part of a broader integrated redevelopment of Sogong Districts 1, 2 and 3 slated for completion by 2029. The plan calls for a simultaneous overhaul of The Plaza in District 1, Hanwha Building in District 2, and Hanwha Finance Plaza in District 3, transforming the cluster into a mixed-use hub combining hotel, office, cultural and commercial functions.

The food and beverage business is also being reshaped. OurHome, acquired last year, expanded its scale by taking over Shinsegae Food's institutional catering operations and is strengthening its restaurant business around the buffet brand Take. Hanwha Galleria's premium ice cream brand Benson, launched last year, is targeting 30 locations this year. Hanwha Galleria is also pursuing the sale of Five Guys — a chain Kim led the acquisition of — aiming to exit at roughly three times the original purchase price.

Industry watchers are taking note of Kim's pace of restructuring, coming barely a month after Hanwha M&S was launched as a new holding company combining the tech and lifestyle divisions. The strategy is seen as one of building scale through real estate development while consolidating Hanwha's position in retail and hospitality through a high-end positioning.

"Kim has been aggressively pursuing real estate development around the launch of Hanwha M&S, expanding the company's footprint — it looks like he is laying the groundwork for independent management," an industry official said. "But there are still things he needs to prove: how he will generate synergies between real estate development and the existing businesses, and whether he can secure a stable cash-generating base."