Government Accelerates Public Procurement, Permits, and Construction Start to "Dispel Concerns Over Supply Contraction"

Won Hee-ryong "Focus on speeding up permits and groundbreaking by year-end"
Financial authorities pressure construction companies to secure cash through collateral

The government has expressed its determination to dispel concerns about supply contraction by advancing public orders and accelerating permits and construction starts by the end of the year.

Won Hee-ryong, Minister of Land, Infrastructure and Transport, is speaking at the 'Construction Industry Normalization Task Force (TF) Kickoff Meeting' held on the morning of the 6th at the Construction Hall in Gangnam-gu, Seoul.
[Photo by Yonhap News]

On the 6th, Won Hee-ryong, Minister of Land, Infrastructure and Transport, met with reporters after the 'Construction Industry Normalization Task Force (TF) Meeting' held at the Construction Hall in Gangnam-gu, Seoul, and said, "Whether we fail to resolve the supply shortage and let it accumulate over the remaining 3 to 4 months until the end of the year, or whether we hit the lowest point of supply now and increase it, will cause a very big difference 2 to 3 years later."

He added, "Since completion and sales do not happen immediately even if rushed, in the fourth quarter of this year, we will focus more on permits and construction starts, which are leading indicators of housing supply, and next year, we will ensure that everything works together to achieve a normal pace."

Although it will be difficult in the short term, the government aims to reverse the initial emergency phase trend to promote and expand supply. To this end, it plans to mobilize all available means.

First, the Ministry of Land, Infrastructure and Transport will directly monitor the progress of land provision by Korea Land and Housing Corporation (LH), orders, and projects with local governments to speed up permits. Minister Won emphasized, "We will concentrate our capabilities to meet or exceed the target for public permit volumes by December (year-end)."

To revitalize private housing supply, there are plans to expand construction finance and guarantee support such as real estate project financing (PF). Companies that overcame liquidity crises by issuing asset-backed commercial paper (ABCP) securitized from PF last October will face note maturities in October and November this year.

Minister Won said, "We discussed with financial authorities about several sites where cash is locked, or where cash flow is blocked due to unsold units or construction delays," and added, "We believe the notes maturing immediately can be resolved."

He continued, "Financial authorities are pressuring construction companies to secure cash to prevent loan defaults through collateral setting and additional capital contributions," and explained, "They are also demanding the partial sale of sites or bringing in joint operators." This means selling or providing good land as collateral if permits or construction starts are not progressing.

However, Minister Won drew a line on allowing resale of multi-family housing sites, saying, "That is too far ahead and disconnected from the policy flow so far." While it is true that they are approaching various regulations related to permits, subscriptions, and sales from the supply side comprehensively, liquidity-related measures and circulation issues take priority.

He pointed out, "It is true that there are questions about whether land resale should be allowed, but in the past, securing land alone could yield profits in the hundreds of billions of won, leading to internal collusion," and added, "In such cases, construction companies that received public land experienced industry distortion phenomena with trillions of won in growth over a few years."

Meanwhile, the government plans to announce real estate supply measures with these contents between the 20th and 25th of this month, before the Chuseok holiday.

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