There’s a mixture of excitement and trepidation in the air as South Korea prepares for the 2018 Games, the biggest-ever winter Olympics with a record 102 events.
It’s also the first one to be held in an Asian country other than Japan. The opportunities are enormous, but can the country avoid the risks associated with holding the mega-event?
Over 50,000 people from over 100 countries are participating in the 23rd Winter Olympics Games, which will be held from 9 to 25 February 2018.
Historically, hosting the Winter Olympics has provided a boost to the hosting country, with some countries benefiting more than others. We speak to Yongmin Lee, JLL’s Head of Research in South Korea, who is cautiously bullish on the outlook for the Games.
Which cities are hosting the Games?
Located in Gangwon Province, host city PyeongChang is about a two-and-half-hour drive from Seoul. There will be two main clusters for South Korea’s first Winter Games: PyeongChang Mountain Cluster for skiing and snowboarding competitions, and Gangneung Coastal Cluster for hockey, curling and skating events.
A dozen venues will be used. Six are being constructed, while six other existing venues will be refurbished for the quadrennial competition. An Olympic plaza with 40,000 seats for opening ceremony and closing ceremony will also be newly constructed.
How much will it cost?
The total budget is an estimated 13 trillion won (US$10.8 billion), including expenditures for road and transportation construction, cityscape development, water supply improvement and tourism development. The budget for the Olympics itself is 2.3 trillion won, which includes facility construction and refurbishing cost.
In comparison, it has been estimated that Russia spent some US$50 billion to host the 2014 Sochi Winter Olympics, making it the most expensive Winter Olympics so far and breaking the record of the 1998 Games in Nagano, Japan.
How does South Korea stand to benefit?
Economic research forecasts major post-Olympics benefits with increased global name recognition for the host city, a short and medium term boost to tourism, economic stimulation and job creation. A Hyundai Research Institute report estimated that the Games will generate 64.9 trillion won (US$55 billion) in direct and indirect benefits.
The aim of the organizing committee and Gangwon Province is to establish the city as “a global city contributing to the promotion of the Olympics and winter sports in Asia.” To that end, venues will be developed as future tourist packages.
The construction of the Seoul-Gangneung railway and road infrastructure will provide a further boost, increasing access and shortening the distance and travel time between the cities from six hours to just one hour.
What impact will the Winter Olympics have on real estate?
As the traffic network expansion progresses, the land price in PyeongChang is on the rise. According to the official land value of a city/county standard lot within the province announced by Gangwon Province and Ministry of Land, Infrastructure and Transport last January, the land price in PyeongChang area has increased 6.04 per cent in a year, the highest increasing rate in Gangwon province. Areas most affected by rising land prices are Jinbu-myeon, Bongpyeong-myeon and Daegwanryeong-myeon.
How sustainable will the Games be?
The organizers need to come up with more tangible plans to ensure the legacy of the nation’s first Winter Olympics and after-use of the different venues. In Nagano, for example, failing to consistently generate income from its Olympic build-ups meant its excessive facility investment resulted in a financial burden.
Conversely, the London 2012 Games were recognized as being the greenest Olympics in history, taking into account environmental and economic impacts on the city during and after the Games.
PyeongChang can also take a leaf out of Tokyo’s experience, which recently scrapped plans to build what would’ve been the most expensive sports stadium in the world in the run-up to its hosting of the 2020 Summer Olympics.
As noted by Neil Hitchen, International Director and Head of Markets at JLL Japan, in a recent post on JLL’s Tsubo site: “Staying true to what makes a city great and not getting carried away with Olympic-fueled construction is key to success.”