[One-Way Real Estate Policy] 'Public Enemy' Public Omnipotence... Cracks Emerge Since the Implementation of the 2·4 Supply Plan

Announcement of 332,000 Housing Units Supply
No Cooperatives Yet Actively Participating
"No Reason Not to Proceed with Projects"
Minister Byeon Chang-heum's Self-Praise on Measures Falls Flat

[Asia Economy Reporters Kangwook Cho, Dongpyo Kim, Onyu Lim] "There is no reason for landowners or associations not to proceed with the project if it is profitable." This is the self-assessment of Byun Changhoom, Minister of Land, Infrastructure and Transport, in an interview with a media outlet on the 16th regarding the February 4th supply plan. The reason is that "it has the strongest incentives, support systems, and even enforceability in history."

However, the market's reaction is quite the opposite. Criticism is mounting that the one-sided real estate policy, which ignores not only the private sector holding the key to supply expansion but also the voices of frontline local governments, is causing existing projects to falter in many places, thereby only increasing market distrust of policies and fear of housing prices.

Questions on Ability to Resolve Stakeholder Conflicts... Concerns over Private Property Rights Infringement Due to Cash Settlement

◆ Market Turns Away from Public Omnipotence = The public-led redevelopment projects, proposed by the government as the core urban supply measure of the February 4th plan, are already facing anticipated difficulties. The government announced it would supply a total of 332,000 households through urban public housing complex projects and public direct implementation redevelopment projects, but so far, no place has expressed active participation. Although the government lowered the resident consent requirement for project promotion from three-quarters to two-thirds, considering the current market response, it is pointed out that this will only fuel resident conflicts over approval or disapproval.

Underlying this reaction is distrust stemming from concerns about infringement of private property rights due to 'public' intervention and a lack of conflict resolution capability. Park Insik, chairman of the redevelopment promotion committee for Yeongdeungpo Shingil 13 District, said, "Redevelopment projects inevitably involve conflicts among various stakeholders such as commercial, residential, and landowners and tenants, and it is questionable whether the public sector has the driving force to resolve these."

Above all, in the market, opposition is spreading over concerns about infringement of private property rights. Since the announcement of the plan, the government has maintained the existing policy of not granting housing occupancy rights to new homebuyers in public-led redevelopment projects but instead providing cash settlements. In fact, in the redevelopment of Huam 1 District, a shantytown in Dongja-dong, Seoul, landowners and owners are opposing the government's unilateral public housing project and demanding its cancellation. Similarly, Junggok Apartment in Gwangjin-gu decided to abandon public direct implementation reconstruction through a survey, citing concerns about private property rights infringement. Major reconstruction promotion complexes in the Gangnam area have also notified residents of their intention not to participate in the project for the same reason.

Public Development Already Underway Also Facing Difficulties... Seohyeon and Taereung Golf Course Developments Stalled

◆ Smooth Progress? Cracks in Land Development Projects Everywhere = The one-sided policy implementation is also causing cracks in major public land development projects. A recent ruling by the Seoul Administrative Court on the Seohyeon-dong public housing district project in Seongnam, Gyeonggi Province, is a representative case. The court ruled in favor of 536 local residents who filed a lawsuit against the Ministry of Land, Infrastructure and Transport to cancel the designation of the public housing district in the first trial. This means the 2,500-household scale development project has effectively returned to square one.

The development of the Taereung Golf Course in Nowon-gu, which the government confidently announced during the August 4th supply plan last year as a key housing supply source in Seoul, is also stalled. Residents, local governments, and district council members are opposing the development. Oh Seung-rok, mayor of Nowon-gu, argued, "If 10,000 households are built on the Taereung Golf Course, the high-density development will deteriorate the living environment." The development of the idle site of the Government Complex Gwacheon, which will accommodate 4,000 households, is also facing fierce opposition from residents and local governments. Residents have even pulled out the recall card, demanding the cancellation of the plan.

Seo Jin-hyung, president of the Korea Real Estate Society (professor at Gyeongin Women's University), predicted, "(If residents opposing public development) proceed with provisional injunction lawsuits or constitutional complaints, it will be difficult to predict when government-led projects will proceed."