The Spread of 'Gonggong Hyemo'... Government-Led Supply Measures Suddenly Halt

LH Employees' Land Speculation Scandal Shakes Public Institution Trust
Public Redevelopment Led by Them Faces Widespread Halt
Outraged Residents Shift from 'Public Distrust' to Private Redevelopment Initiatives

Seoul's villa neighborhood view
[Image source=Yonhap News]

"After the LH speculation scandal broke out, public opinion supporting public redevelopment completely disappeared. Especially young people are greatly outraged and plan to promote private redevelopment." (Owner of Zone A, Mapo-gu public redevelopment application site)

The speculation scandal involving employees of Korea Land and Housing Corporation (LH) in the Gwangmyeong-Siheung new town has put a brake on public-led housing supply measures. Together with the 3rd new town, the momentum for public redevelopment from last year's May-June measures, as well as the urban public housing complex projects and public direct implementation maintenance projects from this year's February-April measures, has significantly declined. As 'public aversion' rapidly spreads, concerns are rising that the government's plan to supply 800,000 households by 2025 may collapse.

According to the urban maintenance industry on the 7th, the recent confirmation that LH employees speculated on land in the 3rd new town Gwangmyeong-Siheung district has deepened conflicts among residents in areas promoting public-led development in Seoul. The core of public-led projects is that the private sector receives various incentives in exchange for trusting public institutions and transferring project rights. However, this controversy has exposed the immorality of the public institutions leading the projects, breaking the trust that transparent and fair development would be carried out.

A resident of Zone B near the station in Mapo-gu, who was reviewing the urban public housing complex project after the February-April measures, said, "Because landowners face cash compensation if they do not transfer land to the public, the already intense conflict between supporters and opponents has worsened, and LH has poured fuel on the fire." The urban public housing complex project involves high-density development of station areas and semi-industrial zones, and the project is confirmed if two-thirds of the owners agree. Although it benefits from expedited permits and increased floor area ratios, land transactions are prohibited and land ownership must be transferred to the public, causing division among residents. This owner said, "There are many merchants and no clear development plan due to aging, so this project was seen as an opportunity, but this incident has created a definite reason to oppose it," adding, "There are even talks that 'it's dangerous to team up with groups like LH.'"

The controversy has also spread to public redevelopment, which had relatively strong market support among public-led policies. An owner in Zone C, Seodaemun-gu, waiting for the announcement of the second public redevelopment candidate sites, said, "We were persuaded to entrust the project because it was publicly implemented and safe, but with the LH scandal, we worry that momentum will be lost," expressing frustration, "The situation was already confusing due to mixing up public-led direct implementation, and now there are even talks about switching to private redevelopment."

Experts believe that since the government's frame of 'public is good' has been broken, the process of promoting public-led housing supply, including the February-April measures, will not be smooth. Yang Ji-young, director of R&C Research Institute, said, "Trust in the public has been broken due to the LH scandal," and predicted, "There will be intensified friction during negotiations going forward, and ultimately the advantage of public-led housing supply?speed?may be diluted."

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