Increasing Sales and Reducing Public Contributions... Accelerating Reconstruction in Seoul's Underdeveloped Areas like Nowon

Seoul City Announces 'Redevelopment and Reconstruction Project Support Measures'
Incentive Floor Area Ratio to be Applied up to Twice
Additional Floor Area Ratio Granted to Existing Overcrowded Complexes
Public Contribution Burden Reduced from 15% to 10%
Efforts to Realize Public Contribution Housing Purchase Costs

The Seoul Metropolitan Government is paving the way for redevelopment projects by increasing the floor area ratio (FAR) of underdeveloped areas by up to 40% compared to the existing levels. This strategy aims to enhance the profitability of redevelopment projects by increasing the number of units available for general sale. Aging apartments in areas such as Nowon-gu, Seoul, are expected to benefit. Additionally, overcrowded areas will be provided with extra FAR to improve project viability.

On the 27th, Yoo Chang-soo, the Deputy Mayor for Administration of Seoul, announced the ‘Two Major Support Measures for Redevelopment and Reconstruction Projects’ to revitalize redevelopment and reconstruction in aging residential areas. Deputy Mayor Yoo explained, "This plan is designed to facilitate ongoing redevelopment projects more smoothly and to open opportunities for redevelopment in areas that have been neglected due to lack of profitability."

Yoo Chang-soo, Deputy Mayor for Administration of Seoul, is holding a press briefing on the 'Support Measures for Redevelopment and Reconstruction Projects' for rapid and stable housing supply on the 27th at the Seoul City Hall briefing room in Jung-gu, Seoul. Photo by Jo Yong-jun jun21@

The city will apply a ‘profitability adjustment coefficient’ to increase the number of housing units available for general sale, which is key to the profitability of redevelopment projects. This coefficient adjusts factors such as land price, existing housing size, and degree of overcrowding to improve the profitability of areas where sales revenue is difficult to expect. Applying this coefficient can double the incentive FAR (allowable FAR) during reconstruction. For example, in a Type 3 area apartment with an existing FAR of 210% and an incentive FAR of 20%, the incentive FAR would increase to 40%. This allows for a 10% increase in sale units and a 10% reduction in public rental housing, thereby enhancing project profitability. Representative beneficiary areas include Sanggye and Junggye-dong in Nowon-gu. These areas have relatively low sale prices and land prices, and even with public contributions, sales revenue is limited.

Additional FAR will also be granted to reconstruction projects that already exceed the current ordinance or allowable FAR. Many aging complexes in Seoul were built according to the ‘current FAR’ before the 2004 zoning subdivision (Types 1, 2, and 3). This has been a barrier to redevelopment projects requiring additional FAR. The city plans to recognize the current FAR in these areas, considering overcrowding and surrounding conditions, and grant additional FAR up to 1.2 times the legal maximum FAR. Detailed criteria such as the ‘current FAR application formula’ for redevelopment and reconstruction will be established through future master plan revisions.

The burden related to public contributions will also be reduced. When upgrading from Type 1 to Type 2 or from Type 3 to quasi-residential zones, the public contribution rate will be lowered from the existing 15% to 10%. More incentives will be provided for building donations such as public rental housing. When calculating the maximum FAR, the ‘building donation coefficient’ will be increased from 0.7 to 1, recognizing greater public contributions when buildings are donated.

The city will also pursue measures to reflect the actual costs when purchasing public housing built through public contributions in redevelopment projects. To account for the recent sharp rise in raw material prices, interest rates, and inflation, the purchase cost will be able to be announced annually, and the revision cycle will be shortened.

In station areas (within approximately 350 meters from platforms), zoning will be upgraded to ‘quasi-residential’ to support high-density mixed-use development. Along with station area redevelopment, focused support will be provided for the creation of ‘strategic use facilities’ such as rental housing, senior facilities, and parks.

Public support will also be increased to accelerate project progress. The road frontage requirement will be relaxed to allow redevelopment even if the road is less than 6 meters wide. With this relaxation, the area eligible for redevelopment in Seoul is expected to increase from 4.84 million square meters to 11.9 million square meters. Height restrictions on hillside areas, which were previously limited due to high-rise and scenic district regulations, will be eased to enable redevelopment of low-rise residential areas on hillsides. Scenic district height limits will be relaxed from the current 12 meters to 20 meters, and high-rise district limits from 20 meters to 45 meters or more.

Deputy Mayor Yoo said, "Areas with high existing FAR have lost momentum due to soaring construction costs, and citizens have borne the inconvenience alone. Through these support measures, we aim to revitalize the sluggish construction market, open the way for improving aging residential areas, and provide a pleasant living environment."

Yoo Chang-soo, Deputy Mayor for Administration of Seoul, is holding a press briefing on the "Support Measures for Redevelopment and Reconstruction Projects" for rapid and stable housing supply on the 27th at the Seoul City Hall briefing room in Jung-gu, Seoul. Photo by Jo Yong-jun jun21@

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