Nominee for Minister of Land, Byeon Chang-heum: "Public-led Redevelopment Projects Activation, Regulation Is Inevitable"

[Asia Economy Reporter Yoo In-ho] “Simple deregulation is feared to be a factor in the rapid rise of housing prices. Most low-rise residential areas are not commercially viable, making it difficult for private developers to act as the sole project entity. Given various conditions, it is a reality that residents find it difficult to develop independently. Therefore, I believe redevelopment and reconstruction should be led by the public sector.”

These are the thoughts expressed by Byun Chang-heum, nominee for Minister of Land, Infrastructure and Transport, during an online press briefing on the morning of the 18th regarding the easing of redevelopment and reconstruction regulations. His remarks reflect skepticism toward private-led redevelopment and reconstruction projects and a commitment to revitalizing public-led redevelopment and reconstruction.

Byun also agreed that the blanket regulation of 37 areas nationwide was “inevitable to some extent,” indicating that he is expected to continue the current regulation-focused policy line after assuming office as minister.

◆ Public-led Redevelopment and Reconstruction Should Be Revitalized = Byun holds the position that regulations on redevelopment and reconstruction are necessary.

Byun stated, “Redevelopment and reconstruction involve changing the use of existing housing and increasing floor area ratio, recognizing additional development rights, which provide enormous benefits. In the case of large complexes, tens of thousands of people relocate and move in, so the impact on the surrounding area is significant, making a certain level of regulation inevitable from an urban management perspective.”

He added, “We know well from past experience how the simultaneous relocation and move-in of thousands or tens of thousands of households affect the surrounding rental and sale markets,” expressing opposition to deregulation.

However, he emphasized, “I do not deny the necessity of sufficiently supplying affordable housing through redevelopment projects. Therefore, while promoting redevelopment and reconstruction, I will consider ways to minimize the side effects. If the public sector makes upfront investments, secures circulating rental housing in advance, or simplifies urban planning procedures to take on roles difficult for the private sector, projects can be expedited,” adding, “This can also free us from issues of preferential treatment that arise when urban planning procedures are relaxed or regulations eased.”

This is interpreted as continuing the current government’s policy of revitalizing public-led redevelopment and reconstruction.

Byun pointed out, “One of the causes of delays in redevelopment and reconstruction projects is central government regulations, but unique urban planning and management by local governments like Seoul also play a significant role,” adding, “It is true that urban planning regulations such as public land ownership and height restrictions act as obstacles causing project delays.”

He further mentioned, “If I become minister, I will prepare additional incentives and develop new business models to revitalize redevelopment and reconstruction.”

In this context, there is a high possibility that the current regulatory policy on redevelopment projects will be maintained.

Byun is expected to maintain relief measures for private-led redevelopment projects while preparing incentive plans to encourage active private participation in public-led redevelopment projects.

◆ Real Estate Regulations Should Continue = Byun agreed that real estate investment is overheating due to factors such as ultra-low interest rates and that regulations such as expanding designated adjustment areas should continue.

He said, “In an unprecedented ultra-low interest rate environment with abundant liquidity, this liquidity flows into the housing market, making the real estate market unstable. In local areas, speculative demand from outsiders collectively purchasing housing causes significant harm to local residents, so the designation of these regulatory areas was inevitable.”

He added, “In the metropolitan area, various measures such as designating adjustment areas and speculative overheating districts are in place to prevent speculative demand inflow,” and “Policies to suppress multi-homeowners through regulations and taxation are being applied.”

He further stated, “Contrary to concerns, except for actual demanders, new investment demand inflow into the metropolitan area is limited under the current system,” agreeing with the current government’s regulatory stance.

Byun also shared the government’s diagnosis that the real estate market is overheating due to ultra-low interest rates.

He explained, “There has been a global low interest rate trend from the beginning, and additional ultra-low interest rate policies were implemented as part of economic stimulus measures to respond to COVID-19, which has indeed become a liquidity risk factor in the housing market. A large amount of money circulates in the market, flowing into various domestic asset markets, providing an important foundation and background for real estate market instability, which no one can deny.”

However, Byun expressed his intention to communicate the real estate market’s instability to financial authorities tightening real estate loans so that related policies can reflect this.

Byun said, “Regarding the issue of monetary authorities deciding interest rate levels, there are macro conditions due to COVID-19 as well as asset markets, so I think decisions will be made comprehensively. From the Ministry of Land’s standpoint managing asset markets, we will accurately convey market concerns so that monetary authorities can refer to them when making decisions.”

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