Ministry of Land and Seoul City Hold 'Public Reconstruction' TF Meeting Today... Discussing Activation Plans

Discussion on Detailed Guidelines for 8·4 Measures Public Reconstruction
Private Associations Ignore... Doubts on Additional Supply of 50,000 Households
Possibility of Regulation Easing... Ministry of Land, Infrastructure and Transport "Not Yet Reviewed"

[Image source=Yonhap News]

[Asia Economy Reporter Moon Jiwon] The government and Seoul Metropolitan Government will discuss detailed guidelines for the core 'public participation high-density reconstruction (public reconstruction)' project of the August 4 housing supply plan on the 10th. Since there are many opinions that private associations' participation will be low at present, some regulatory relaxation measures such as expanding the target for 50-story building permission or adjusting the donation ratio are also expected to be discussed.

According to government officials, the Ministry of Land, Infrastructure and Transport and Seoul City will hold a task force (TF) meeting this afternoon to create specific guidelines on increasing the floor area ratio for public reconstruction and easing height restrictions.

Public reconstruction is a method that allows 50-story high-density development in reconstruction complexes involving Korea Land and Housing Corporation (LH) or Seoul Housing and Communities Corporation (SH), but 50-70% of the additional floor area ratio is donated and supplied as public housing. The residential ratio cap in quasi-residential areas and the obligation to install parks will also be relaxed to maximize residential space. The government predicts that this will enable the supply of at least 50,000 additional households over five years.

However, the industry expects that private participation will not be as high as the Ministry of Land, Infrastructure and Transport anticipates. Private associations are not welcoming of public institutions' participation in projects, and there is a high possibility that expected profits will be largely recouped due to measures such as the price ceiling system. In particular, areas classified as 'other areas' rather than urban/metropolitan centers or regional/district centers under the 2030 Seoul Plan can only build up to 40 stories even for mixed-use residential-commercial buildings in commercial or quasi-residential zones. Most reconstruction projects, such as the Eunma Apartment in Daechi-dong, Gangnam-gu, fall under 'other areas.'

Therefore, there is an analysis that the upcoming TF meeting may discuss regulatory relaxation measures such as enabling 50-story buildings in reconstruction complexes currently unable to do so by changing zoning or center system, or adjusting the donation ratio. There is also talk of possibly adjusting the policy to recoup 90% of expected profits. In fact, Seoul City is known to have a stance favoring further easing of regulations on public reconstruction.

The Ministry of Land, Infrastructure and Transport currently states that it is not considering additional regulatory relaxation beyond what was announced in the August 4 plan. A ministry official said, "Today's meeting is to identify public reconstruction project sites and discuss specific ways to proceed in the future," adding, "There has been no discussion with Seoul City about additional regulatory relaxation beyond what was announced in the plan."

However, the Ministry of Land, Infrastructure and Transport may pursue regulatory relaxation with Seoul City on detailed matters later. The ministry calculated that about 20% of the 93 project sites (260,000 households) in Seoul that have not received project implementation approval would participate in public reconstruction, enabling the supply of 50,000 additional households, but the response from associations has been less favorable than expected. An industry official said, "If there are no additional incentives in a situation where many rental housing units are included and expected profits are recouped, market response will not be strong."