005930.KS) and sparking investor concerns that it is wasting cash on a trophy property.

The conglomerate smashed the previous record auction price for a single plot of land in South Korea with its 10.55 trillion won ($10.14 billion) bid, more than triple the appraisal value.

It would be the highest price by far for a single piece of land in Asia since the global financial crisis, according to CBRE Research, topping the $3.6 billion paid last year by Hong Kong's Sun Hung Kai Properties (0016.HK) for a site in a commercial district in Shanghai.

Investors and analysts expressed alarm at the price that Hyundai was willing to pay for a site at a time when it could be pouring money into higher dividends or more factories. At the site, it plans to build an auto theme park and a hotel as well as new offices.

"The bid price is nonsense. I was stunned," said Kim Sung-soo, a fund manager at LS Asset Management and an investor in all the three Hyundai companies in the bidding group.

"Even taking into account competition with Samsung, the bid price is excessive," Kim said, adding that he expected it to cost another $6 billion to develop the property.

Hyundai Motor Co (005380.KS) shares fell 9 percent, their biggest drop in three years, after the bid was announced by the seller, state-run Korea Electric Power (KEPCO) (015760.KS). Sister firm Kia Motors (000270.KS) closed 7.8 percent lower and parts maker Hyundai Mobis Co (012330.KS), also in the bid group, declined 7.9 percent. Between them, the three lost nearly $8 billion in market value on Thursday.

Although Hyundai Motor Group has plenty of cash, Hyundai Motor Co and Kia, which together rank fifth by global auto sales, have been posting slowing profits as a strong local currency saps overseas earnings.

"This deal is going to take a huge chunk out of Hyundai's vault, and dipping their hands into a cash stash that could have otherwise been used for higher dividend payouts and R&D is going to aggravate many investors, especially foreigners," said Ko Tae-bong, auto analyst at HI Investment & Securities.

The companies also need to fund new factory projects in Mexico and China, which are expected to go into production in 2016.

KEPCO shares gained 5.8 percent after Hyundai won the auction by what a KEPCO official called "a wide margin". The official did not disclose the size of Samsung's bid and a Samsung Electronics spokeswoman declined to comment.

CASH-RICH

Hyundai Motor Group's 10 listed companies, excluding financial firms, had 42.8 trillion won in cash and equivalents at the end of the first quarter, according to public filings compiled by data consulting firm CEO Score.

The South Korean economy is dominated by sprawling conglomerates, or chaebol, and Seoul-listed stocks have tended to trade at discounts to shares elsewhere partly due to low dividends and investor worries about corporate governance.

Shareholder activism in South Korea tends to be muted, as many fund houses manage money on behalf of chaebol or are themselves part of big corporate groups, said Chae Yi-bai, an analyst at Solidarity for Economic Reform, an activist group.

Foreign investors own 46 percent of Hyundai shares.

"Hyundai Motor needs to proactively reach out to shareholders to convince them on the rationale of the deal and provide adequate explanation," he said.

Chung Sun-sup, CEO of research firm Chaebul.com, said Hyundai was keen to secure the land because its current headquarters on the outskirts of Seoul is not befitting of its stature, and the KEPCO land is the only prime plot available. He said 76-year-old Chairman Chung Mong-koo may want to leave "something big" when he passes control to his son, Chung Eui-sun.

He also figures that about 30 Hyundai Motor affiliates pay a combined 220 billion won in office rent. "If you flip that around, that's roughly equal to the amount of interest you'd get on 10 trillion won in bank deposits. So in some sense that is a rationale for such a high bid for the Kepco land."

CAR THEME PARK

While some investors were shocked, Hyundai's big bid for a landmark in the heart of Seoul's trendiest district may help ease its tax burden under proposed rules that would tax excess corporate cash.

Based on last year's earnings, companies that belong to the Hyundai Motor Group would have the largest exposure to the law, facing 284 billion won in further taxes if the government required conglomerates to spend at least 60 percent of net profit on investment, wages and dividends, CEO Score has said.

Hyundai Motor Group has said it plans to build a vast complex on the 79,342 square metre site that will house its headquarters as well as a hotel, convention center and a theme park. It noted that rivals such as BMW and Volkswagen have tourist attractions around their headquarters.

"In order to achieve production capacity of 10 million cars and bolster brand value that befits a global top-five company, we need a global business center. The bid is the result of comprehensively reviewing its value as a symbol of the group's second growth phase," a Hyundai Motor Group spokesman said.

Hyundai and Kia have been keen to build a premium image around their brands to better compete with the likes of German rivals that are taking a rising share of the domestic market.

This was not the first time cash-rich Hyundai Motor Group drove up the price in a big auction.

A consortium of the same three Hyundai Motor Group companies bid around 5 trillion won in 2011 to buy Hyundai Engineering & Construction (000720.KS), which had been expected to fetch around 3 trillion won but had symbolic value as the original company of the Hyundai empire, founded in 1947 by Chung Ju-yung.