Profits from Gangnam GBC Development Will Also Be Used for Gangbuk Development

The area around Samseong-dong, Gangnam-gu, and Jamsil-dong, Songpa-gu. The lower right is the site of Hyundai Motor Global Business Center (GBC).
[Image source=Yonhap News]

[Asia Economy Reporter Lee Chun-hee] The profits generated from the development of the Gangnam Global Business Center (GBC) and other developments in the Gangnam area of Seoul will be utilized for balanced development in the Gangbuk region.

On the 9th, according to the National Assembly and the Ministry of Land, Infrastructure and Transport, the "Framework Act on National Land Planning and Utilization," which broadens the scope of use for cash payments from development profits, passed the plenary session of the National Assembly on the same day.

The new National Land Planning Act expands the usage area of cash payments from development profits, which are received as cash contributions in exchange for permitting urban planning changes such as floor area ratio increases through land use changes within district unit planning zones in special/metropolitan cities, to cover the entire special/metropolitan city. Currently, these funds can only be used within the respective autonomous district.

However, a portion of the cash payments from development profits must be allocated to the autonomous district to which the area belongs, and the usage is designated for infrastructure and public facility installations, with a certain percentage prioritized for the installation of long-term unexecuted urban planning facilities that have been pending for over 10 years.

Seoul City has long requested the government to allow these cash payments to be used not only within the respective autonomous district but also throughout the entire city. This is because the payments generated in the commercial hub of Gangnam are significantly higher than those from the Gangbuk area. The public contributions collected by the three Gangnam districts?Gangnam, Seocho, and Songpa?are expected to reach 2.4 trillion KRW this year and next, accounting for about 81% of Seoul’s total 2.9558 trillion KRW.

Perspective view of Hyundai Motor Group Global Business Center (GBC) 105th floor new office building.

The amendment also includes improvements to activate the designation of minimum location regulation zones. The minimum location regulation zone system, introduced in 2015, allows for separate determination of density (floor area ratio, building coverage ratio) and permitted uses regardless of land use districts or zones. To promote this system, residents can now participate from the designation and initial planning stages and propose zone designations and plans.

Additionally, the scope of designation has been expanded by presidential decree to include areas requiring creative regional development, and special exemptions from the obligation to secure publicly accessible spaces?limited to 10% or less of the building site?are granted within minimum location regulation zones, thereby further expanding incentives for zone designation.

The National Land Planning Act passed today will be enforced six months after promulgation, considering revisions to presidential decrees delegated by subordinate laws.

Choi Im-rak, Director of Urban Policy at the Ministry of Land, Infrastructure and Transport, stated, "Through this amendment, development profits generated from Gangnam area development can be invested in the relatively infrastructure-deficient Gangbuk area, thereby strengthening the foundation for balanced development. Furthermore, through the designation of minimum location regulation zones based on private proposals in areas requiring creative spatial formation such as urban convergence special zones, we expect to foster innovative hubs where residential, commercial, and cultural functions are integrated."