The ambitious plan to build an international business district in Cheongna, Incheon, is on the verge of collapse, reviving memories of the scrapped Yongsan redevelopment project.

The Korea Land & Housing Corp. on Wednesday sent out its final notice to the private contractors of Cheongna International Business Town, vowing to cancel the contract unless they paid the remaining land costs by the end of the month.

“We relaxed several business prerequisites such as the capital amount and the ratio of foreign direct investment,” said an official of LH.

“The contractors are, nevertheless, refusing to resume business, blaming the stagnant real estate market, so we had to give an ultimatum,” he said.

The Cheongna district, together with Songdo and Yeongjong, constitute the Incheon Free Economic Zone, one of the most popular investment destinations in the country.

The 6.2 trillion won ($5.6 billion) project officially kicked off in 2006 with the aim of creating a large-scale business complex by 2021.

As the plan at first seemed lucrative, the project developers paid most of the land price in 2008 ― 500 billion won out of 604 billion won ― but have been delaying the next payment since 2009, asking for changes to the business blueprint.

Their key demand is that the serviced residence buildings be changed into studio apartment buildings and hotels and casinos converted into business hotels and supermarkets.

According to the original plan, some 31 percent of the land and 73 percent of the total profits were to be allocated to serviced residence buildings, which had gained popularity in the past.

But their profitability fell following increased regulation in 2008 and a Supreme Court ruling in 2010 that they could not be used as lodging facilities.

Amid the escalating conflicts, the private contractors summoned an urgent meeting and agreed to try to persuade the state-run land operator.

Currently, the list of investors includes foreign-based Pangaea Blue Hill and local engineering and constructing firms such as POSCO, Lotte, Doosan, Ssangyong, Shinsegae, Seohee and others.

The last remaining hope for the investors is the possibility that LH may not want to abort the entire project, in fear that it might fail to find a new project operator, especially with the negative precedent set by the Yongsan project.

By Bae Hyun-jung (tellme@heraldcorp.com)