Geonsanyeon "Large-scale Housing Supply in Seoul Possible if Landowners Receive Good 'Carrot' Incentives"

"Core of 2·4 Measures is Urban Public Housing Complex Projects and Small-scale Redevelopment Projects"
"If Floor Area Ratio Increase and Additional Profit Rate Guarantee are Ensured, Swift Promotion is Expected"

The Dongja-dong jjokbang village near Seoul Station, the largest jjokbang village in Korea, will be transformed into a high-rise apartment complex consisting of more than 10 buildings.
On the 5th, the Ministry of Land, Infrastructure and Transport, Seoul Metropolitan Government, and Yongsan District announced the promotion plan for the "Public Housing and Urban Regeneration Project to Improve the Residential Environment of Seoul Station Jjokbang Village." The photo shows the area around District 1, Lot 1 of the Huam Special Planning Zone in Dongja-dong, Yongsan-gu, Seoul on the same day.

As concerns arise that the public-led housing supply target set forth in the government's February 4 housing supply plan is exaggerated, evaluations suggest that if sufficient incentives are offered to landowners, a large-scale housing supply can be reasonably expected.

On the 9th, the Korea Research Institute for Construction Industry Policy (KRICIP) released a report titled "Evaluation and Tasks of the February 4 Housing Supply Plan," stating that "the core of the February 4 plan lies in urban public housing complex projects and small-scale redevelopment projects."

In the report, KRICIP positively evaluated the government's policy shift from demand suppression to significantly expanding the supply of high-quality sale apartments in urban areas through the February 4 plan.

KRICIP particularly expressed expectations that if the government faithfully adheres to various incentives guaranteed in urban public housing complex projects and small-scale redevelopment projects?such as increased floor area ratios and guaranteed additional profit rates?projects will be promoted in many regions, enabling a substantial supply of housing.

KRICIP stated, "From the landowners' perspective, assuming the government proceeds as announced, the process can be much easier and faster compared to self-implementation, and uncertainties can be greatly reduced," adding, "Moreover, since additional profits are guaranteed, it can serve as a significant incentive."

At the same time, it was added that the 'carrot' incentives should be presented more swiftly and clearly to encourage landowners to complete their cost-benefit analysis and participate in the projects.

KRICIP noted, "Due to the nature of redevelopment projects in existing urban areas, complex interests and rights relationships must be coordinated, so the actual time to completion may be longer than expected," and "Since detailed conditions and criteria for landowners to calculate their cost-benefit are not yet clearly organized, they need to be finalized promptly."

Furthermore, it was pointed out that trust in the market must be sufficiently built by accumulating successful cases of public implementation projects.

Regarding public direct implementation redevelopment projects, KRICIP forecasted that by exempting the reconstruction excess profit levy and the two-year residency obligation for union members, guaranteeing excess profits, and enabling certain and swift project promotion, these projects could be attractive in some redevelopment zones.

However, concerns were raised that in the absence of established trust in public sole implementation, with union members' decision-making rights excessively restricted and major criteria for cost-benefit judgments not yet finalized, participation in the projects may be limited.

KRICIP pointed out that since exact standards for incentives such as "guaranteeing an additional profit rate of 10 to 30 percentage points compared to self-implementation," as presented in the government's plan, have not yet been released, significant difficulties may arise later.

They also warned that conflicts and difficulties could intensify when the public directly carries out projects, advising that especially in project areas with many commercial properties, active cooperation with the private sector is necessary to share roles.

KRICIP emphasized that for the success of this plan, detailed matters related to guaranteeing additional profits to landowners must be finalized, successful cases accumulated, and sufficient trust in public sole implementation must be built.

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