[Initial Insight] Ministry of Land's 'Solo' Redevelopment Speed Race

'The illustration is an example to aid understanding, and the development plan is not finalized at all.'

This disappointing phrase appears in the image description on page 16 of the press release for the "Public Discussion on Livelihood with the People" released by the Ministry of Land, Infrastructure and Transport (MOLIT) on the 13th. Since the theme of the press release was "Busan Opening the Local Era Wide," it included redevelopment plans for downtown Busan led by MOLIT.

The phrase was found in the paragraph explaining Busan's railway undergrounding plan. It was located under a picture titled "Example of before and after undergrounding aerial view," depicting old houses near the railway transformed into a forest of high-rise apartments. However, there was only the method of "covering the undergrounding costs with profits gained from redevelopment above the railway," and nothing was decided about when or where the development would take place. Given this situation, MOLIT had no choice but to include such a discouraging phrase.

Although MOLIT said it would lower the threshold for redevelopment and reconstruction through the January 10 measures, the reason it is evaluated as "ineffective" can be found in the same context. From "postponing safety inspections for 30-year-old apartments," "relaxing redevelopment aging requirements," to "collecting less reconstruction excess profit recovery tax," measures are being announced almost daily, but the market does not budge. On the 14th, MOLIT Minister Park Sang-woo raised his voice saying, "We will push forward reconstruction and redevelopment projects with a sense of speed," but on the ground, people sigh, saying, "Who would want to promote maintenance projects in times like these?"

"Construction costs have soared so much that no matter how much regulations are eased, it’s meaningless. Would the union members pay hundreds of millions of won in additional contributions to reconstruct?" (Certified real estate agent A in Gangnam-gu). "We even took down the congratulatory banners for passing the safety inspection. With high interest rates and a poor economy, residents are waving their hands saying 'not now'" (Reconstruction union leader B of an apartment in Dobong-gu). "In fact, the safety inspection was not abolished but postponed to 'before project implementation approval.' By that stage, union establishment, architectural review, and selection of design contractors are all completed. If the safety inspection is not passed then, the damage will be greater. Has the government prepared any measures for this?" (Legal affairs officer C in Seocho-gu).

The price of reconstruction apartments, which should have been stirred by the January 10 measures, has fallen further. Regulatory easing is sidelined, and news that additional contributions will increase due to construction costs has led many to put their homes on the market. Jamsil Jugong Complex 5 (exclusive area 76㎡), a major reconstruction project in Songpa-gu, was traded for 2.408 billion won on the 18th of last month. This is more than 50 million won lower than December last year (2.46 billion won).

The success of reconstruction and redevelopment is closely related to speed. It takes over a decade from promotion to completion, during which the economic situation and real estate market can change. The longer it takes, the higher the project costs and the more the union members suffer. But this is a story when demand for maintenance projects is overflowing.

A senior MOLIT official, when told that the market remains lukewarm even after the regulatory easing announcement, retorted, "But we cannot just do nothing, can we?" Since there is nothing to be done about construction costs and interest rates, are they saying they will just go their own way? No one will applaud if you shout you will speed ahead alone on a path no one follows. No matter how close the general election is, policies must be made by understanding the needs of the people. This is especially true for real estate policies related to the homes we live in.

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