'Use Change' High-Density Development in Station Areas Shakes Urban Planning Framework

Ruling Party and Government Finalize Housing Supply Measures
Abandon Capital Gains Tax Relief, Shift to High-Density Development
Land Use Changes More Radical Than Previous Plans
Private Sector Participation, Quality Housing Supply Still a Distant Dream

[Asia Economy Reporter Yoo In-ho] The government's real estate measures to be announced before the Lunar New Year holiday are virtually settling on easing floor area ratio restrictions for high-density development around transit stations.

As the ruling party, the Democratic Party of Korea, has effectively dropped the proposed capital gains tax relief plan, the options for the measures have inevitably become limited.

[Image source=Yonhap News]

In the market, there is criticism that without easing redevelopment and reconstruction regulations, it will be difficult to expand private sector participation or supply a large volume of quality housing with just this level of measures.

According to the Ministry of Land, Infrastructure and Transport and political circles on the 13th, the ruling party and government are in the final stages of consultation over supply expansion plans to be discussed at the real estate-related ministers' meeting scheduled for the 15th.

Among the contents mentioned so far, the most likely option under active consideration by the ruling party and government is "high-density urban development."

On the previous day, Hong Ik-pyo, the Policy Committee Chair of the Democratic Party of Korea, said in a radio interview, "We are preparing measures to dramatically increase supply in the Seoul metropolitan area through high-density development and land use changes," adding, "We are also considering changing general residential areas to semi-residential or commercial areas, and semi-industrial zones to residential areas, along with transit station development."

This is more radical than the simple "floor area ratio increase" previously announced by Land, Infrastructure and Transport Minister Byeon Chang-heum. Compared to providing limited floor area ratio incentives within existing zoning districts, this allows for higher density.

Higher density means more houses can be built on the same land area.

According to Seoul's urban planning ordinance, applying a higher zoning classification to a second-class single-use district raises the legal floor area ratio cap. The floor area ratio cap for residential areas is 250%. Changing the zoning to semi-residential areas can increase the floor area ratio up to 400%. Changing to commercial areas allows up to 800% in general areas and 1000% in central areas.

The problem is that most of the areas subject to floor area ratio easing are low-rise multi-family houses and villas, making it difficult to supply quality housing.

Park Won-gap, Senior Real Estate Specialist at KB Kookmin Bank, said, "Low-rise residential areas are generally located on sloped land, so harmonious development is difficult with just floor area ratio increases," adding, "Increasing floor area ratio alone in a situation with limited available land can lead to indiscriminate development that harms aesthetics."

Another challenge is that many steps must be taken?from finalizing zoning change criteria, deciding on project methods, selecting candidate sites, designing, relocating residents, starting construction, to completion?and the interests between landlords and tenants are complex. Even if candidate sites are selected this year, occupancy is expected only 4 to 5 years later.

Experts point out that the government is shaking the big framework of urban planning as it tries to increase supply without easing redevelopment and reconstruction regulations that could attract private participation.

Concerns are also raised about dismantling zoning districts, which were set considering the overall function of the city, just to increase housing supply.

Professor Lee Chang-moo of Hanyang University's Department of Urban Engineering said, "The very idea of suddenly changing zoning districts, which were decided after long discussions to rationally use and manage urban land, is amateurish," adding, "The approach of changing the entire urban management system to solve short-term housing supply shortages itself is problematic."

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