Ministry of Land, Infrastructure and Transport and HUG Promote Expansion of Infrastructure in 1st Generation New Towns

Utilization of Public Contribution Fund Securitization Method

A plan is being promoted to utilize public contribution funds securitized during the reconstruction process of the 1st generation new towns to expand infrastructure.

The Ministry of Land, Infrastructure and Transport and the Housing and Urban Guarantee Corporation (HUG) held a 'Seminar on Policies and Finance for Aging Planned Urban Renewal' on the 10th at the Press Center in Jung-gu, Seoul.

At the event, HUG announced directions for financial support and asset securitization promotion for aging planned urban renewal projects.

To facilitate smooth reconstruction, the Ministry of Land plans to support the initial project costs of reconstruction project implementers through the 'Future City Fund' worth 12 trillion won.

A parent fund will be created targeting policy finance and private investors to secure large-scale renewal funds, and project implementers will raise funds through respective child funds.

[Image source=Yonhap News]

Considering the outstanding balance of real estate project financing (PF) in the financial sector, it is expected that the 1st generation new towns will lack funding capacity from the start of reconstruction in the leading districts.

The Ministry of Land plans to complete the structural design of the Future City Fund within this year and hold an investment briefing session for fund formation next year.

To expand necessary infrastructure, the Public Contributions Imposition Fund (PIF) for securitization of public contribution assets will be promoted.

The basic plan for aging planned urban renewal of Bundang New Town in Seongnam, Gyeonggi Province, revealed on this day, includes raising the floor area ratio from 174% (average floor area ratio) to 315% (standard floor area ratio), which could increase the number of households in Bundang from 96,000 to 155,000.

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