SH President: "We Will Supply 100,000 Housing Units by Rebuilding Old Apartments"

[Asia Economy Reporter Ryu Taemin] Seoul Housing and Communities Corporation (SH Corporation) is planning to reconstruct 40,000 aging apartments it owns into more than 100,000 units. This will be done using the ‘land lease’ method emphasized by SH President Kim Heondong, aiming to maximize building height and promote zoning upgrades.

Kim Heon-dong, President of Seoul Housing and Communities Corporation, is disclosing the details of public housing assets held at the Seoul Housing and Communities Corporation asset disclosure briefing held on the 15th at Gaepo-dong, Gangnam-gu, Seoul.
[Photo by Yonhap News]

On the 15th, SH Corporation held a press briefing at its headquarters in Gaepo-dong, Gangnam-gu, Seoul, announcing plans to reconstruct the aging rental complexes it owns to supply as many units as possible. Kim Heondong, President of SH Corporation, stated, “Although it varies by region and location, we plan to reconstruct the existing 40,000 aging units into more than 100,000 units, increasing the supply by over 60,000 units. We will build as high as the allowable floor height permits, and in areas where zoning upgrades are possible, we will pursue them to supply the maximum number of units with high quality and high standards.”

President Kim emphasized, “A portion of the increased supply from reconstruction will be provided through the land lease method, where the land is publicly owned and only the buildings are sold. We are preparing to offer units sold as buildings only throughout Seoul.” The land lease method, known as ‘half-price apartments,’ involves SH Corporation leasing the land it owns and selling only the buildings, reducing the sale price to about half of the market price.

Regarding the recent controversy over Korea Land and Housing Corporation (LH) purchasing unsold apartments at high prices, President Kim said, “We will not buy unsold apartments whose sale prices cannot be verified because their construction costs are not disclosed. However, we may consider unsold apartments from companies that transparently disclose construction costs.” He added, “We will prioritize purchasing homes at the lowest prices and will conduct strict verification before acquisition.”

On this day, SH Corporation disclosed asset details including acquisition costs, book values, and publicly announced prices by autonomous district and year for the 131,160 public housing units it owns. The disclosed assets include 105,536 apartment-type public housing units and 25,624 purchased rental housing units. The total acquisition cost of these homes as of the end of December 2021 was 10.0615 trillion KRW for land and 11.901 trillion KRW for buildings, totaling 21.9625 trillion KRW. The average acquisition cost per unit was 167.44 million KRW. The total estimated market value was 76.3847 trillion KRW (an average of 580 million KRW per unit), which is 3.4 times the acquisition cost.

The acquisition costs and book values disclosed are based on the accounting settlement as of the end of December 2021. The publicly announced prices are as of June 1, 2022. For estimated market values, apartment-type rental housing and long-term lease housing use KB market prices, while purchased rental housing values were calculated by reverse-engineering based on the Ministry of Land, Infrastructure and Transport’s 71.5% public housing price realization rate announced last year.

President Kim Heondong said, “We will transparently disclose all information so that the ‘ten million Seoul citizens,’ who are the owners and shareholders of our corporation, can always check SH Corporation’s asset status. We will continue to disclose public data to satisfy citizens’ right to know and to enhance the transparency and reliability of our corporation’s management.”