SEOUL, South Korea—Shares of Korea's largest automakerHyundai dropped 9% after the company agreed to paythree times the assessed value of a large, centralproperty that will become its headquarters and an auto-themedtourist park.

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The $10.14 billion (10.6 trillion won) bid wasalso more than twice that of Samsung, the only other qualifiedbidder for the electric utility property, according to mediareports. It is certainly the largest deal in Korea since theeconomic collapse, and is most likely the nation's priciest realestate transaction ever.

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Reuters said investors and analysts were shocked at theHyundai was willing to pay for the site.

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"The bid price is nonsense. I was stunned," said KimSung-soo, a fund manager at LS AssetManagement, who spoke with Reuters. "Even takinginto account competition with Samsung, the bid price is excessive,"Kim said, adding that he expected it to cost another $6billion to develop the property in the trndy Gangnamdistrict in the heart of South Korea's capitol city.

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But company officials say Hyundai and its sister nameplate KIA,need a world-class HQ location to stay competitive, noting thatEuropean rivals, including Volkswagen andBMW, have a tourism element to their headquarters.In addition, company officials say they plan to develop and leaseoffice space to more than 30 affiliated companies.

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Electric utility firm Kepco announced in July that it planned tosell the property before relocating to South Jeolla province inNovember, as part of a national effort to develop thoseregions.

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“This looks like the largest ever land transaction deal inKorea,” JoAnn Hong, Seoul-based director atSavills Plc, told Bloomberg. “The pricetag for the land looks a bit high for now, but it all depends onhow Hyundai will develop it and create value there.”

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Click Reuters to read the full story.

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David Phillips

David Phillips is a Chicago-based freelance writer and consultant with more than 20 years experience in business and community news. He also has extensive reporting experience in the food manufacturing industry for national trade publications.