[Exclusive] Government to Quadruple State Property Acquisitions... Policy Shift Underway

The Ministry of Economy and Finance has allocated a budget of 300 billion won for the purchase of reserve state-owned land for next year, more than tripling this year’s amount. Amid ongoing controversy over the “fire sale” of state-owned properties, this move is interpreted as the government’s attempt to shift its asset management policy from a focus on sales to strengthening acquisitions. Additionally, the government appears to be aiming to significantly increase overseas real estate purchases, thereby reducing rental expenditures for diplomatic missions abroad and benefiting from potential asset price appreciation.

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According to the Ministry of Economy and Finance on November 11, the budget for the reserve land purchase project for next year (2026) has been set at 300 billion won, about four times the 70 billion won (based on the supplementary budget) allocated for this year. The budget has seen a steep increase from 80 billion won in 2022, 80 billion won in 2023, 80 billion won in 2024, and 70 billion won in the 2025 supplementary budget, to 300 billion won in 2026. This is a 3.3-fold (230 billion won) increase compared to the previous year, marking the largest scale in the past five years. The reserve land purchase project is a program to secure real estate in advance that can be used for government buildings and public facilities in response to changes in administrative demand.

The government appears to have significantly increased the acquisition budget for next year, judging that the amount allocated for purchases has been excessively low compared to the scale of state-owned property sales since the inauguration of the Yoon Suk-yeol administration in 2022. According to the Ministry of Economy and Finance, over the past five years, the average annual budget for acquiring state-owned property remained around 80 billion won, while annual sales revenue averaged 1.4538 trillion won. While sales revenue steadily increased, acquisitions stagnated, undermining the “balance between acquisition and disposal” principle stipulated by the State Property Act. A ministry official explained, “We increased the budget to reduce the imbalance between sales and purchases, as we need to buy as much land as we sell to maintain balance.”

Article 3 of the State Property Act sets out the basic principles for managing and disposing of state-owned property: it must serve the national interest, maintain a balance between acquisition and disposal, consider public and utilization value, take economic costs into account, and follow transparent and efficient procedures. The recent budget increase is interpreted as a policy adjustment to restore the “balance between acquisition and disposal” clause in line with current realities.

A significant portion of the 230 billion won increase in next year’s reserve land purchase budget is expected to be used for overseas real estate acquisitions. According to the Ministry of Economy and Finance, of the 80 billion won reserve land purchase budget for 2024, 76.35 billion won was spent on domestic projects and 3.65 billion won on overseas projects. Until recently, the budget executed for overseas projects was minimal.

The ministry plans to use a large part of the increased budget for acquiring land and buildings for the development of integrated government complexes in countries such as Mexico and the United States. Since cultural centers, consulates, and public institutions are dispersed overseas, rental expenditures have continued to rise, so the government aims to consolidate them into integrated complexes to reduce budget waste. While last year’s budget for overseas projects was only several billion won, this year it is expected to exceed 100 billion won.

A ministry official stated, “Given that real estate prices continue to rise abroad, we intend to purchase buildings. Since cultural centers and consulates abroad are scattered, considerable rental expenses are incurred, and consolidating them would prevent budget waste.” In particular, in rapidly growing economies such as Mexico and other developing countries, real estate prices are likely to continue rising unless there are major disasters or wars, so the government expects to benefit from asset appreciation on its overseas acquisitions.

Domestically, the budget will be used for the advance purchase of reserve real estate to secure a foundation for supplying public housing by redeveloping outdated government buildings and official residences into mixed-use complexes. The government also plans to review vacant private buildings and purchase and remodel them for use as government offices.

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Meanwhile, as controversy over the “fire sale” of state-owned properties has intensified, the Ministry of Economy and Finance has begun a comprehensive review of the sales process in accordance with President Lee Jaemyung’s directive. The ministry is now preparing new state property disposal standards, which will include a requirement to report the sale of any state-owned property valued at 50 billion won or more to the president.

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