Ministry of Land and Seoul City 'Cooperation' in Jeopardy... Oh, Red Light on Reconstruction

Noh Hyung-wook Expresses Concerns Over Private Reconstruction
Limits to Seoul City's Solo Efforts... Uncontrollable Apartment Prices Also a Hurdle

[Asia Economy Reporters Kim Hyemin and Lim Onyu] A red light has been lit on the private-led reconstruction promoted by Seoul Mayor Oh Se-hoon. This comes as Roh Hyung-wook, the nominee for Minister of Land, Infrastructure and Transport, who holds the key to deregulation, expressed concerns. He also showed reluctance regarding the relaxation of safety inspections proposed by Mayor Oh. Amid this, with housing prices, which were set as a prerequisite for reconstruction promotion, not being controlled, there are concerns that reconstruction may not accelerate during his term.

According to the Ministry of Land, Infrastructure and Transport on the 3rd, Roh expressed a negative view on the private reconstruction method in the response materials submitted to the National Assembly the day before the confirmation hearing. He stated, "Private projects have played an important role as a means of housing supply in urban areas, but they have also caused various problems such as market instability," and evaluated that "excessive development profits enjoyed by landowners, prolonged project delays due to conflicts among association members, and internal corruption within associations have caused various social problems."

He added, "As an alternative, various forms of public maintenance projects have been introduced," clearly stating the policy to increase the proportion of public-led redevelopment and reconstruction projects. Regarding the relaxation of reconstruction safety inspection standards proposed by Mayor Oh, he showed a negative attitude, saying, "Relaxing the standards for the purpose of revitalizing projects, contrary to the original intent of verifying the necessity of reconstruction, requires caution."

Previously, Mayor Oh had engaged in a subtle tug-of-war over public-led reconstruction. At an emergency briefing for real estate stabilization on the 29th of last month, he said, "The decision-making authority on which redevelopment or reconstruction to pursue lies with the landowners," adding, "The superiority will naturally be determined according to market order." He also implicitly emphasized that "the public-led method requires transferring ownership to the government during the maintenance period," making it difficult to obtain residents' consent.

[Image source=Yonhap News]

Although Roh and Mayor Oh emphasized close cooperation, the failure to narrow their differences on reconstruction methods has led to speculation that policy cooperation between the government and Seoul City is practically off the table. Shim Gyo-eon, a professor in the Department of Real Estate at Konkuk University, said, "Unless a lame-duck situation occurs for the current government, even if Roh is appointed, the confrontational stance between Mayor Oh and the government will continue," adding, "The government is likely to maintain its policy of increasing supply through public-led projects."

The problem is that without cooperation from the government and the National Assembly, there are limits to creating an environment that activates private reconstruction. While some parts can be resolved by Seoul City’s authority, it is burdensome to proceed alone without cooperation. Additionally, the failure to control apartment prices centered around reconstruction complexes is also cited as a factor preventing Mayor Oh from actively pursuing reconstruction.

Professor Shim said, "If the mayor had a guaranteed four-year term, even if housing prices initially rise due to development promotion, there would be an opportunity to stabilize them later through sufficient supply, but Mayor Oh does not have such an opportunity," adding, "It will be difficult to visualize the normalization of maintenance projects within a year."

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