Micro-Investments in Closed Police Substations... Seoul Launches Fractional Investment Pilot Project [Real Estate AtoZ]

Signed MOU with Lucent Block for Joint Initiative
Sangdo 5 and Sinsa 1 Security Centers Under Review as Candidate Sites

The Seoul Metropolitan Government is introducing 'real estate fractional investment,' a system that allows citizens to invest in the development of underutilized public sites such as closed police substations.

On September 1, the city announced that it will launch a pilot project for 'real estate fractional investment (token securities, STO)' targeting one or two unused or underutilized public assets, including closed police substations.

Sinsa 1 Security Center, Sinsa-dong, Eunpyeong-gu. Provided by Seoul City

The candidate sites under review are the Sangdo 5 Security Center in Sangdo-dong, Dongjak-gu, and the Sinsa 1 Security Center in Sinsa-dong, Eunpyeong-gu. These facilities are currently vacant following the relocation of the security centers or are being temporarily used by the local community. The city plans to discover and implement projects that can utilize such spaces for small-scale purposes, such as urban mini-storage facilities.

Prior to this, on August 28, the Seoul Metropolitan Government signed a memorandum of understanding (MOU) with LucentBlock, which operates the real estate profit securities distribution platform 'SOYOU.' LucentBlock has a proven track record in digital securitization of multiple real estate assets, including Sindorim Pinpoint Tower, Seongsu Kolon Tower, and Daejeon Hana Startup Park.

'Real estate fractional investment (token securities)' is a method of securitizing a specific real estate asset, enabling multiple investors to collectively own shares of the property with small individual investments.

The city plans to establish a detailed business plan for the 'real estate fractional investment pilot project' within this year, complete the necessary preliminary procedures for commercialization, and launch a public offering of real estate token securities in the first half of next year. Based on the results of the pilot project, the city aims to expand real estate fractional investment to other assets as well.

Sangdo 5 Security Center, Sangdo-dong, Dongjak-gu. Provided by Seoul City

With the introduction of the real estate fractional investment development model, citizens will be able to share in the profits generated by local facilities, thereby enhancing the value of public assets.

Investors, including citizens, can earn dividend income from public asset rental fees and realize capital gains from the future sale of these assets. Meanwhile, the city can increase revenue and improve asset utilization by entrusting and publicly offering public assets. Upgrading outdated facilities will also improve the environment and provide facilities needed by the local community.

Lim Changsoo, Director of Future Space Planning for the Seoul Metropolitan Government, stated, "By digitizing public assets through the new concept of real estate fractional investment, we will create a 'citizen participation co-development model' that enables flexible utilization of assets and shares development profits with citizens."