'Land Supply and Public Housing Construction' Combined to Revitalize Housing Supply

Private Operators Pay Only the Difference After Deducting Land and Construction Costs
Housing Supply Expansion Through Reduced Financial Burden
Pilot Project in Pyeongtaek Godeok New City
Project Briefing Session on the 15th

The Ministry of Land, Infrastructure and Transport announced on the 13th that it will implement a pilot project of the ‘package-type public offering project’ linking public housing construction and land supply in Godeok International New City to accelerate the supply of public housing and alleviate the financial burden on private construction companies.

The package-type public offering project is a business model that combines the previously separately promoted private sale ‘land supply’ and the Korea Land and Housing Corporation’s (hereinafter LH) ‘public housing construction project,’ offsetting land costs and public housing construction costs.

When LH contracts with a private developer through a package-type public offering project that combines private sale land supply for apartment sites worth 100 billion KRW and public housing construction work worth 90 billion KRW, the private developer only needs to pay the difference of 10 billion KRW between the land cost (100 billion KRW) and the construction cost (90 billion KRW) to immediately receive the apartment site and proceed with the private sale project. Subsequently, the contract and interim payments recovered through the private sale project are used to promote LH’s public housing construction work.

Typically, private developers can only sell apartments after full payment of the land price, so even if they receive land from LH, construction can only begin after paying the full balance. However, the package-type public offering project allows immediate use of the land upon contract, enabling early housing supply by shortening the period by more than two years compared to the existing process.

The package-type public offering project is expected to enable efficient project promotion through virtuous financial circulation, as private developers can reduce the burden of procuring initial land costs and public housing construction can be promoted using the funds recovered from private sale projects.

The Ministry of Land, Infrastructure and Transport stated, "In a situation where the private sector’s role in housing supply has shrunk due to high interest rates, rising construction costs, and a real estate market downturn, we expect that the package-type public offering project will alleviate the financial burden on the private sector, activate participation, expand housing supply, and shorten the supply period."

Before the full-scale promotion of the package-type public offering project, the Ministry plans to conduct a pilot project in Godeok International New City, Pyeongtaek, starting in May. Godeok International New City is expected to stimulate private housing supply participation due to abundant housing demand driven by the extension of GTX A and C lines and the construction of Samsung Electronics’ Pyeongtaek campus.

LH, the project implementer, plans to hold a business briefing session on the 15th to help private developers understand the package-type public offering project and gather opinions.

Jin Hyun-hwan, the first vice minister of the Ministry of Land, Infrastructure and Transport, said, “The package-type public offering project is meaningful in that it presents a new business model to revitalize private sector participation in housing supply amid the recent real estate market downturn, and we will do our best to ensure the pilot project proceeds successfully.”