Chungnam, Up to 20% Floor Area Ratio Increase for Apartment Construction with Local Company Participation

[Asia Economy (Hongseong) Reporter Jeong Il-woong] Chungnam Province is pushing to expand incentives for floor area ratio (FAR) in multi-family housing. The strategy is to increase the FAR by up to 20% at multi-family housing construction sites involving local companies to boost actual participation rates.

The criteria for FAR incentives in multi-family housing will be set to adjust the FAR within legal limits by reflecting the participation rate of the local construction industry in multi-family housing projects conducted in the region.

On the 29th, the province announced that for the first time nationwide, the FAR incentive for multi-family housing construction involving local companies will be expanded from the current 5% to a maximum of 20%, and the scope of application will be broadened to include all multi-family housing construction projects such as urban and residential land development, as well as local materials and equipment.

The expansion of FAR incentives by the province is being promoted in response to the trend that while the participation rate of local companies in public sector construction projects has been increasing annually, the participation rate of local companies in the multi-family housing construction sector within private construction projects remains low.

In fact, the participation rate of local companies in public sector construction projects increased by 9.3 percentage points from 44.7% in 2019 to 54% in 2020. However, in the private sector, it only increased by 0.3 percentage points from 19.1% to 19.4% during the same period.

This is analyzed to be because major trades and materials are selected mainly from existing partners before the start of multi-family housing projects, making it difficult for local companies to participate after construction begins.

Accordingly, the province has established and operated district unit plan (FAR) standards for multi-family housing construction since 2014, but it has been confirmed that the limited scope of application to province-approved projects and the low incentive rate (5%) have not effectively induced practical participation from the local construction industry.

To solve this problem, the province is revising the system by expanding the scope of incentive application to all multi-family housing construction projects promoted within the province, including urban development, residential land development, industrial complex support facilities, and residential environment improvement projects, and by raising the incentive rate.

Jeon Young-jun, a research fellow at the Korea Construction Industry Research Institute, estimates that if the FAR incentive criteria are implemented, the contract amount for the local construction industry will increase by up to 251.21 billion KRW annually, the production inducement effect will increase by up to 265.56 billion KRW, and the added value will increase by up to 210.77 billion KRW. He also explained that an annual employment effect of 3,312.6 new jobs is expected.

Yang Seung-jo, Governor of Chungnam Province, said, “The incentive policy applying to all multi-family housing construction projects and including local materials and equipment is the first case attempted nationwide by Chungnam. If implemented, it is expected to establish a growth foundation for the local construction industry and revitalize the local economy through increased order rates.”

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