Suspicions of Public Development Speculation, Pandora's Box Opened

Local Housing Sites, Railroads, and Road Development Ripple Effects
Over 10 Additional Speculators Confirmed... Considering Preemptive Seizure

Deputy Prime Minister for Economy Hong Nam-ki and Minister of Land, Infrastructure and Transport Byeon Chang-heum, along with others, bow their heads during the announcement of the "Message to the People Regarding Real Estate" held at the Government Seoul Office in Jongno-gu, Seoul on the 7th. Photo by Yoon Dong-joo doso7@

[Asia Economy reporters Kangwook Cho and Sunhee Son] Allegations of land speculation triggered by ‘public development’ are spreading indiscriminately. Suspicion of speculation using prior development information has been raised not only in the 3rd phase new towns in the Seoul metropolitan area, including the controversial Gwangmyeong-Siheung district in Gyeonggi Province, but also in most public projects promoted by the government, local governments, and public enterprises, such as local land development projects and railroads and roads. The industry is reacting that the ‘Pandora’s box’ has been opened as the speculation controversies involving public enterprise employees, public officials, and politicians, which had been conducted secretly until now, have surfaced.

On the 11th, a ruling party official said, "According to the first investigation results of the government joint investigation team, it has been confirmed that there are about 10 more LH employees who purchased land in the Gwangmyeong-Siheung district in addition to the 13 previously identified."

According to the government and the National Assembly, the government joint investigation team plans to immediately request an investigation by the National Police Agency’s National Investigation Headquarters (NIH) regarding suspected speculation cases confirmed in the first investigation of about 4,000 Ministry of Land, Infrastructure and Transport employees and about 10,000 LH employees. They also plan to take strong measures such as provisional seizure on the relevant real estate. This is with the possibility of ‘property confiscation’ in mind if speculation is confirmed through subsequent investigations. It was reported that such measures, including property preservation orders, were discussed at an internal meeting of the Prime Minister’s Office the day before. Another ruling party official said, "Property confiscation will be maximized within the scope of applicable laws," adding, "It is possible to confiscate (speculated real estate) by applying the Anti-Corruption Property Confiscation Act." ▶Related articles on pages 4, 7, and 10

However, the market’s reaction is that this investigation result is just the tip of the iceberg. There are even ongoing allegations of speculation by LH and local government officials in development projects that were not subject to the first investigation. The Busan Research and Development Special Zone, which the government announced last month as a public land designation target along with the Gwangmyeong-Siheung district, also saw a surge in land transactions before the plan was announced. In the Daejeo 1-dong area of Busan, where the land district is to be established, land transactions increased from 20 cases in December last year to 40 cases in January this year, and then surged to 72 cases in February. In February, the amount of land transactions was also 33.6 billion won, more than three times the monthly average of last year.

In the newly designated public housing districts, such as the Sanjeong district in Gwangju and the Advanced 3 district where an artificial intelligence (AI) cluster will be established, speculation allegations have also been raised, prompting Gwangju City to conduct a full investigation targeting city and district office employees.

Speculation allegations are also emerging in small-scale public land in local areas, including Gyeongnam. The People’s Solidarity for Participatory Democracy recently revealed, "There have been reports that LH employees were involved in speculation or acquisition of pre-sale rights using development information in places such as Gimhae in Gyeongnam and Yeonho district in Daegu." In Gimhae, the ‘Heungdong Urban High-tech Industrial Complex (270,000㎡)’ and the Jillye ‘Doyochon Development Project (420,000㎡)’, in which LH participated as an implementer, are being mentioned.

It was also revealed that there was real estate speculation by Korea Expressway Corporation employees using undisclosed information such as design drawings for the Saemangeum-Jeonju highway, and in Sejong City, a public audit was requested regarding real estate speculation allegations involving city council members.

Professor Shim Gyo-eon of Konkuk University’s Department of Real Estate said, "If abnormal transaction volumes occur before the designation of development areas, it is highly likely that insider information has leaked," and emphasized, "To restore public trust, the government should expand investigations to all public land development areas nationwide to clarify the suspicions."

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