Reviewing Introduction of Regional Win-Win REITs in City-Led Development Projects
Gradual System Establishment... "Sharing Development Profits with Citizens"
Location map of the site planned for the introduction of the Yongsan International Business District Regional Win-Win REITs. Seoul City
On June 4, the Seoul Metropolitan Government announced that it is actively considering the introduction of "Regional Win-Win REITs" (Real Estate Investment Trusts) that enable citizen participation and profit-sharing in major development projects, including the Yongsan International Business District.
The city plans to take the lead in applying a citizen-participatory development model to the Yongsan International Business District. In particular, a "citizen co-development" initiative will be implemented for the B9 site (planned), which is to be directly developed by Seoul Housing and Communities Corporation (SH Corporation) within the Yongsan International Business District. This initiative will allow citizens to participate and share in the outcomes and profits.
The Regional Win-Win REITs system under review is a scheme in which, if deemed necessary by the Minister of Land, Infrastructure and Transport, local residents are given priority in public offerings and development profits are returned to the community. REITs are real estate investment companies that pool funds from many investors to invest in real estate and distribute profits. However, more than 30% of all shares are offered to an unspecified number of people regardless of region, which has resulted in development profits being dispersed to external investors rather than local residents.
The city intends to create an environment in which local residents can participate in investment by collaborating with SH Corporation and Seoul Investment Management Co., Ltd. (AMC), both of which have experience in REITs projects.
In addition, the city is considering introducing Regional Win-Win REITs in various development projects, including public land directly developed or being sold by the city, and public-private partnership projects utilizing underused public land. The city is also exploring the application of this model to essential facilities that are necessary for the community but have faced installation or operational difficulties due to resident opposition, as well as to public asset revenue-generating projects.
For private sector projects, the city plans to encourage participation in the Regional Win-Win REITs system by offering benefits such as recognition of public contributions and expedited permitting, rather than imposing regulations.
However, to ensure the swift implementation and stability of the Regional Win-Win REITs, the city will introduce the system in phases. After conducting a business feasibility analysis in the second half of this year, pilot projects will be selected. Next year, the city will prepare public offering guidelines for the Regional Win-Win REITs and recruit operators, with the aim of fully launching pilot projects starting in 2027.
The city also plans to ensure operational transparency and stability through annual performance monitoring. At the same time, it will develop customized models that can be expanded throughout Seoul based on the results of the pilot projects.
In addition, the city will pursue "real estate digital assetization," which involves issuing real estate as security tokens (STO) using blockchain technology. The city expects that this will open up opportunities for small-scale investors to easily invest in commercial real estate.
Lim Changsoo, Director of Future Space Planning at the Seoul Metropolitan Government, stated, "Regional Win-Win REITs are a new attempt to shift development profits, which have been concentrated among a small minority, into the realm of citizen sharing. We will realize the 'beginning of co-development,' created together with citizens, by expanding the city administration philosophy of 'walking with the underprivileged' to a variety of development sectors."
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