Gyeonggi-do to Supply 'Public Rental Industrial Complex' with Rent Reduced by One-Third

[Asia Economy (Uijeongbu) = Reporter Lee Young-gyu] Gyeonggi Province is promoting the supply of public rental industrial complexes where tenants can move in at affordable prices similar to public rental housing. The plan aims to drastically reduce the burden on small and medium-sized enterprises (SMEs) by lowering rent to about one-third of the current level.

According to Gyeonggi Province on the 17th, the province decided to supply some industrial sites at Pyeongtaek BIX, scheduled for completion by the end of this year, and Yeoncheon BIX, expected to be completed next year, as rental properties. The rent rate, which was previously 3% of the supply price, will be reduced to below 1%, and the plots will be divided into smaller units to allow many SMEs to move in.

This initiative was promoted after Gyeonggi Province Governor Lee Jae-myung received a proposal from an SME owner via social networking services (SNS) and instructed a review of the matter.

The business owner stated, "Industrial sites with infrastructure are too expensive to purchase or rent, making it impossible for small businesses like ours to afford," and suggested, "It would be great if Gyeonggi Province could create public rental industrial complexes and provide factory rentals at reasonable prices."

The Gyeonggi Housing and Urban Corporation (GH) previously supplied a total of 155,000㎡ of rental land in three project districts, including Paju Seonyu, in 2010, but due to unsold lots, it has now fully converted to sales.

The province cited reasons for the unsold rental land, including supplying mainly large plots exceeding SMEs’ financial capacity, offering less preferred sites on the outskirts of industrial complexes, and the lack of collateral making it difficult to secure financing from financial institutions.

Accordingly, in the short term, the province plans to supply industrial sites at Pyeongtaek and Yeoncheon BIX at 30% of the current rent. The supply scale will be determined after a demand survey.

By lowering the rent rate from 3% to 1%, the annual rent for a 3,300㎡ (1,000 pyeong) plot at Pyeongtaek BIX will drop significantly from 48 million KRW to 16 million KRW, and at Yeoncheon BIX from 27 million KRW to 9 million KRW.

Additionally, to ease the burden on small-scale companies, the province plans to supply industrial sites with a minimum plot size of 900㎡ (270 pyeong). In this case, the expected annual rent is 4.3 million KRW for Pyeongtaek and 2.4 million KRW for Yeoncheon.

In the mid to long term, the province will also pursue amendments to related laws to expand industrial complex rental land. First, it plans to propose to the government and National Assembly the addition of a clause in the Development Gains Recovery Act allowing the province to impose and collect a "special development charge" (tentative name), creating a development gains return fund with 40% of the corporation’s development profits to reduce industrial land rents.

They are also considering selling industrial and self-sufficient land (residential district) after development to public offering-type REITs and converting them to rental properties. Furthermore, they will supply SME-tailored rental land through tenant demand surveys during industrial complex planning, reduce development costs by supporting infrastructure expenses from the state or local governments, and consider converting purchased industrial land to rental properties.

The province plans to revise the industrial complex plan and management plan in December to reflect plot division and changes in sales methods, announce industrial land rentals in February next year, select tenants in March, and enable move-in by June.

Accordingly, amid national economic crises such as COVID-19, the province expects that supplying affordable rental land will help alleviate SMEs’ financial burdens and support economic activities.

Ryu Gwang-yeol, head of the province’s Economic Office, explained, "In addition to Pyeongtaek and Yeoncheon BIX, we will carefully examine profitability and other factors for eight industrial complexes promoted by the Gyeonggi Housing and Urban Corporation to consider further expanding public rental industrial complexes. We will also explore diverse and concrete methods through expert meetings," he said.

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