Designation → Cancellation → Redesignation... Gwangmyeong Siheung 'Predicted Speculation'

LH Proposal and Ministry of Land Plan
Local Governments Involved in Cadastral Status Survey
Potential Leaks in Designation Procedures
Land Expected to Be Developed Someday
Prices Steadily Rise 30-40%

[Asia Economy reporters Kangwook Cho and Mune Won] Controversy is rapidly escalating as employees of Korea Land and Housing Corporation (LH), responsible for the practical work of government new town development, are embroiled in large-scale land speculation allegations. Some point out that the Gwangmyeong-Siheung district was the ‘top priority’ candidate for a new town and that a series of incidents such as leaks of new town development plans have frequently occurred in the past, arguing that this was a ‘predicted speculation.’

◆ "Land destined for development anyway" ? Predicted speculation = The Gwangmyeong-Siheung district has undergone designation, cancellation, and re-designation as a new town. Since the Lee Myung-bak administration designated this area as a public housing district in 2010, expectations for development have spread. However, due to a real estate market downturn and local residents’ opposition, the project stalled, and after being canceled as a district in 2014, it was left neglected as a special management area in 2015.

From the start of the current administration, it was mentioned as a strong candidate for a new town. It was considered a candidate site whenever the first and second rounds of 3rd phase new town candidates such as Namyangju Wangsuk and Bucheon Daejang were announced in 2018, but ultimately failed due to residents’ opposition and controversies over prior information leaks. The government’s ‘recycling’ of a new town candidate site that had already been discarded once under the pretext of expanding large-scale housing supply provided the pretext for these problems.

Because of this, even locally, expectations that it was "land that would be developed someday" had continued before the recent re-designation of the new town. Looking at land prices in the Gwangmyeong-Siheung district, this expectation is clearly reflected. According to the Ministry of Land, Infrastructure and Transport’s individual publicly announced land price system, the official land price per square meter of land A in Garim-dong, Siheung was 223,000 KRW when designated as a public housing district in 2010 but rose to 299,000 KRW last year. Similarly, land C in Noonsa-dong, Gwangmyeong increased from 156,000 KRW to 224,000 KRW during the same period. Despite the cancellation of the district, land prices steadily rose by 30-40%.

There are also claims that prior leaks of information about new town and housing site designations are nothing new. In fact, during the designation of the public housing district in 2010, rumors circulated that local government officials had bought land in advance before the government’s official announcement.

◆ Development information leaks erupt repeatedly = Land speculation controversies involving LH employees have occurred in the past as well. Before the designation of the 3rd phase new town in 2018, development plans for the Goyang Wonheung district, a strong candidate site, were leaked. Investigations revealed that the leak was caused by an LH employee.

During last year’s National Assembly audit, numerous criticisms were raised regarding LH internal employees’ pursuit of private interests. The number of LH employees who received administrative sanctions, warnings, or disciplinary actions through internal audits increased by 45.4%, from 566 in 2016 to 823 in 2019. Reasons for disciplinary action included bribery, gifts or entertainment, and ‘internal information leaks.’

New town target areas are determined through proposals by LH, requests from local governments, or long-term housing supply plans from the Ministry of Land, Infrastructure and Transport. According to LH’s land development project procedures, investigations and selection of candidate sites begin based on established land supply and demand plans, followed by proposals for district designation. During this process, prior consultations with related agencies occur, including environmental, traffic, disaster, and population impact assessments; establishment of metropolitan traffic improvement measures; energy use plan consultations; and underground facility consultations, among many other steps until the district unit plan is finalized. Because of this, cooperation with frontline local governments during investigations of candidate site cadastral status is inevitable. No matter how much security is maintained, the nature of the information makes leaks unavoidable. This is why some argue that LH employee speculation may be just the ‘tip of the iceberg.’

An industry insider said, "The market’s reaction is that ‘what was going to happen has happened,’" adding, "especially, there was a lack of safeguards for public officials and public institution employees who know the most about public housing projects."