Yoon Promises Supply Expansion and Deregulation... Which Real Estate Stocks Will Benefit from the Next Government?

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[Asia Economy Reporter Kwon Jae-hee] With the election of Yoon Seok-yeol, the People Power Party candidate, as the 20th president, attention is focusing on real estate policies. During the Moon Jae-in administration, real estate policies that suppressed demand ironically fueled housing price increases, stirring public anger that is said to have influenced the outcome of this election. President-elect Yoon has promised real estate policies such as large-scale supply expansion and easing of reconstruction regulations. Let’s take a look at which beneficiaries might emerge in relation to these policies.

President-elect Yoon has pledged to supply 2.5 million housing units during his term. The plan includes 2 million units led by the private sector, with a private sale ratio of 48% of the total supply, and 1.5 million units supplied in the metropolitan area.

Not only supply but also loan regulations are expected to be eased. He promised to relax the LTV (Loan-to-Value) ratio to 80% for first-time homebuyers and 70% for one-home owners. Additionally, to revitalize private supply, he pledged to ease the burden of the reconstruction excess profit recovery system, relax safety inspection standards, exclude private housing from the price ceiling system, and increase floor area ratios. These measures are expected to lead to an expansion in new orders.

Amid this favorable breeze in the real estate market, construction-related stocks such as Hyundai Engineering & Construction and GS Engineering & Construction are considered beneficiaries. In particular, Hyundai Engineering & Construction saw an over 8% rise immediately after Yoon’s election was confirmed.

Lee Dong-heon, a researcher at Daishin Securities, analyzed, "Hyundai Engineering & Construction has emerged as a leader in redevelopment projects based on quality and brand. It operates across all sectors including domestic housing, nuclear power plants, and wind power, highlighting its appeal as a leading stock at the turning point of the construction industry."

Hana Financial Investment named GS Engineering & Construction as the biggest beneficiary construction company in urban redevelopment projects. Hana Financial Investment gave GS Engineering & Construction a ‘Buy’ rating with a target price of 57,000 KRW.

Seo Hyun-jung, a researcher at Hana Financial Investment, evaluated, "GS Engineering & Construction has rapidly increased its supply volume since 2015 based on its strong brand power, ‘Xi’. Aggressive housing expansion is expected with market improvement following the easing of redevelopment regulations."

The Yoon administration’s real estate policy is expected to increase remodeling demand as housing transactions become more active, especially due to tax and regulatory easing.

Accordingly, Hi Investment & Securities named Hanssem as a beneficiary stock of the Yoon administration’s real estate policy. As of the end of 2018, buildings over 30 years old accounted for 37.1% of the total building stock. Among these aging buildings, residential buildings hold the highest proportion, with 32.8% in the metropolitan area and 50.9% in provincial areas.

Lee Sang-heon, a researcher at Hi Investment & Securities, analyzed, "The building remodeling market is expected to grow steadily in the future."

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