Ten Unsold Former Public Institution Properties... Troubles Due to COVID-19

Public Institutions Relocating to Provinces Leave Behind Sites and Buildings
Sale Efforts Ongoing for Years... 10 Out of 119 Locations Remain
Real Estate Market Slump Due to COVID-19... Sales Facing Difficulties

[Asia Economy Reporter Moon Jiwon] The sale process of former real estate assets held by public institutions that have relocated to provincial areas is experiencing final hurdles. Out of a total of 119 properties slated for sale, 10 remain, but due to limited usage or high prices, the sales are proving difficult.

According to the Ministry of Land, Infrastructure and Transport (MOLIT) and industry sources on the 3rd, MOLIT recently commissioned a service for "Establishing Measures to Promote the Sale of Former Real Estate and Sale Promotion." Until last year, the focus of the service was on promoting the sale of former real estate, but this year’s service includes analysis of obstacles to sales and the development of solutions. This reflects the government's concern that further delays in sales are no longer feasible.

Of the 119 former real estate properties owned by public institutions, 109 have been sold so far. The remaining properties include the Central 119 Rescue Headquarters in Namyangju, Gyeonggi Province; Korea Mine Reclamation Corporation in Jongno, Seoul; Korea Educational Development Institute in Seocho; Korea Industrial Complex Corporation in Guro; and the Korea Land and Housing Corporation (LH) Bundang Ori Building, among others, totaling 10 locations. A MOLIT official explained, "Only properties with many obstacles remain, such as those designated as greenbelt or research facilities."

However, due to the real estate market slump caused by the COVID-19 pandemic and repeated failures in the commissioned service by MOLIT, it is analyzed that selling the remaining former real estate will not be easy. Although the sale of the Korea Educational Development Institute and Korea Agro-Fisheries & Food Trade Corporation buildings in Seocho-dong, Seoul, is in its final stages, both are expected to be purchased by government ministries or other public entities, leading to criticism of a 'recycling' practice.

The Korea Educational Development Institute and Korea Agro-Fisheries & Food Trade Corporation buildings located in Seocho-dong, Seoul, are expected to be sold as early as this month. The Korea Educational Development Institute site will be purchased by SH Corporation and used to supply public housing, while the Korea Agro-Fisheries & Food Trade Corporation building is known to be utilized by the Ministry of Agriculture, Food and Rural Affairs as a space for related industries.

Some criticize that the government agencies are ultimately buying the difficult-to-dispose former real estate and supplementing relocation costs in a 'recycling' manner. In fact, the former building of the Ansan Korea Institute of Ocean Science and Technology, which repeatedly failed to sell since 2012 due to land use restrictions and price issues, was purchased by Ansan City in April for a budget of 109 billion won.

The Ministry of Strategy and Finance purchased the Incheon Police Training Center (25.6 billion won) in 2010, the National Agricultural Science Institute in Suwon, Gyeonggi Province (63 billion won) was bought by the National Election Commission in 2013, and Seoul City has purchased former real estate such as the Korea Industrial Human Resources Corporation in Mapo-gu (176.5 billion won) and the Rural Economy Institute in Dongdaemun-gu (50.8 billion won) over several years.

As these sales continued, in 2016, then Saenuri Party lawmaker Jeong Yong-gi pointed out, "A situation where unsold real estate is taken over by other public institutions should not occur."

The market situation is also unfavorable. The prolonged COVID-19 pandemic has contracted the office market, and companies are reluctant to purchase real estate. An industry insider pointed out, "Despite the long period during which former real estate has not been sold, the government has not made sufficient efforts to resolve issues such as deregulation or complex rights relations."

In fact, the Korea Mine Reclamation Corporation’s Coal Hall has not even attempted disposal yet due to failure to coordinate opinions with the Coal Association and others who invested funds at the time of purchase. In the case of the Korea Industrial Complex Corporation’s KICOX Venture Center, there are many inquiries, but the sale price has risen from 97.5 billion won to 101 billion won this year, causing repeated failures to meet the price. The Dong-A Tower 2nd floor of the Korea Internet & Security Agency in Seocho-dong, which has been repeatedly unsold since 2011, recently saw its sale price increase from around 12 billion won to 23.3 billion won as it is now being bundled with other real estate for bidding.

Regarding this, a MOLIT official said, "We are continuously monitoring the situation of former real estate and striving to sell all properties," adding, "We will proceed with determination."

This content was produced with the assistance of AI translation services.