LH Land Development Approaches 100 Sites Nationwide... Speculation Risks Everywhere

No Verification Even for Employees Among Annual Trillions-Won Compensation Recipients
Criticism of Lax Land Compensation Management

[Asia Economy reporters Kangwook Cho and Mune Won] There are criticisms that the lax land compensation management by Korea Land and Housing Corporation (LH) has fueled land speculation among its employees in the Gwangmyeong-Siheung district. Despite nearly 100 land development projects underway nationwide, including the 3rd phase new towns in the Seoul metropolitan area, and the execution of annual land compensation budgets worth trillions of won, LH has not even verified whether its employees are among the compensation recipients, thereby fostering insensitivity toward speculation.

According to the Ministry of Land, Infrastructure and Transport on the 9th, the budget planned for this year’s land compensation payments for the 3rd phase new towns?Wangsuk in Namyangju, Gyosan in Hanam, and Gyeyang in Incheon?where LH began negotiated compensation at the end of last year, amounts to 9.1054 trillion won. This estimate reflects pure cash compensation, excluding land-for-land swaps or REITs methods. This is about 1.6 trillion won (21.3%) more than the 7.5 trillion won spent last year and nearly three times the 3.8 trillion won spent in 2019.

However, despite such astronomical compensation expenditures, it has been revealed that LH has not separately confirmed even basic details such as whether its own employees are included among the compensation recipients.

An LH official stated, "There is no process to verify whether a person is an LH employee when providing cash or land-for-land compensation related to new towns or other public developments, so there is no separate list of compensated employees."

As a result, experts point out that most of the development projects LH is conducting nationwide, including the problematic Gwangmyeong-Siheung district and other 3rd phase new towns, are effectively exposed to internal employee speculation without safeguards. According to LH, the corporation is currently conducting projects in 97 locations nationwide, including six 3rd phase new towns. Most of these projects are being carried out through land expropriation or land readjustment methods.

The government’s second round of new land site designations in April, as a follow-up to the 2·4 Plan, is also presumed to be managed by the Ministry of Land, Infrastructure and Transport or LH. In fact, Minister Byeon Chang-heum of the Ministry of Land stated on the 13th of last month that "20 nationwide land development districts out of the 830,000 housing supply plan under the 2·4 Plan have been virtually finalized." This implies that the government is managing a list of candidate land development sites.

Experts argue that for the government’s investigation to be effective, the scope should be expanded nationwide beyond just new towns. A real estate industry official said, "Even before candidate sites are selected, LH or local government development corporation employees responsible for development conduct preliminary surveys, and even if they did not know at the time of selection, the names of rejected sites naturally become known locally, so it is inevitable that people know which areas are planned for development." As the LH scandal spreads, tip-offs about speculation are pouring in from across the country, including the Judicial Examination Preparation Group (Sajunmo) filing complaints against a city council member in Siheung, Gyeonggi Province, and a senior official in Pocheon City on suspicion of speculation.

Professor Shim Kyo-eon of Konkuk University’s Department of Real Estate said, "Although the 3rd phase new towns have become problematic this time, there are quite a few small-scale public land development projects nationwide," adding, "To restore public trust, the government needs to expand investigations at least to public land development areas nationwide, including the Seoul metropolitan area, to clarify suspicions."