"Supplying a New Town Every Year"... 1.35 Million Units to Break Ground in the Seoul Metropolitan Area Over 5 Years [Real Estate AtoZ]

Project Operators and Land Use Conversion...
"Increasing Housing Supply Volume and Speed"
"Increasing Urban Supply and Improving Conditions for Private Redevelopment Projects"

The Korea Land and Housing Corporation (LH) has decided to directly undertake housing projects on residential land it has developed in the Seoul metropolitan area, rather than selling these sites to the private sector. The corporation will also actively pursue converting non-residential land for residential use. In existing public housing sites, project approval and permitting processes will be streamlined to accelerate development. The government also plans to overhaul regulations to facilitate the reconstruction of aging public rental housing and government office buildings, while increasing the utilization of school sites and idle land.

The government aims to improve conditions for private sector housing supply by easing regulations that have slowed projects and by supporting financing. If these plans are realized, the government estimates that 1.35 million housing units could be supplied in the Seoul metropolitan area, including 330,000 units in Seoul, by 2030. Over the next five years, the government plans to supply an average of 270,000 units per year, a scale comparable to the first-generation new towns (approximately 300,000 units). This supply volume is about 1.7 times the average annual supply of 158,000 units over the past three years.

Jamsil Apartment. Photo by Jo Yongjun

On September 7, Deputy Prime Minister and Minister of Economy and Finance Koo Yooncheol presided over a meeting of related ministers on real estate, where these housing supply expansion measures were discussed. While the June 27 household debt management measures focused on managing demand for housing, this is the first time the government has presented a concrete blueprint for increasing supply. This marks the second real estate policy initiative since President Lee Jaemyung took office.

Deputy Prime Minister Koo stated, "Since 2022, the conditions for housing supply in Seoul and the metropolitan area have become increasingly challenging due to a decline in construction starts. Ensuring sufficient supply is crucial for market stability," adding, "We will prioritize residential stability for the public and manage the real estate market in a balanced manner by considering both supply and demand."

Project Operators and Land Use Conversion... "Increasing Housing Supply Volume and Speed"

Given the continued housing market downturn and unsold units in regional areas, this policy is squarely focused on the metropolitan area. Unlike previous housing supply measures that were based on permitting, the new administration has shifted to using construction starts as the key metric.

First, LH will directly develop apartment sites it is currently preparing or will prepare, which were previously intended for sale to the private sector. The government plans to amend the LH Act to legally formalize the principle that residential land developed by LH will no longer be sold to private entities. There are currently public housing sites in the metropolitan area with a capacity for 199,000 units. By directly developing sites that were previously slated for private sale, the government expects that 60,000 units can be started by 2030.

LH will also convert non-residential land it owns in land development and public housing districts to secure an additional 15,000 units by 2030. The government will establish new review and selection procedures to reassess and adjust land use plans for each district according to local demand and conditions. The Ministry of Land, Infrastructure and Transport, which holds the relevant authority, will apply special procedures to streamline processes and provide incentives, such as reinvesting a portion of development profits, to ensure effectiveness.

To address delays in public housing site projects, the government will accelerate project timelines by up to two years. In areas like Seoripul in Seoul, where district designation is being prepared, the timeline could be shortened by more than six months. Redundant procedures will be reduced, and processes that can be conducted simultaneously will be integrated. During the compensation phase, the government will introduce new incentives, such as cooperation bonuses and tax reductions, to expedite progress.

Through these measures, an additional 46,000 units could be started by 2030. The government will also continue to review plans to designate new housing sites in the metropolitan area with a capacity for 30,000 units. In public housing sites such as the third-generation new towns, the government aims to supply 5,000 units this year and 27,000 units next year.

A real transaction notice at a real estate agency in Mapo, Seoul. Photo by Dongju Yoon

"Increasing Urban Supply and Improving Conditions for Private Redevelopment Projects"

To boost housing supply within urban areas, the government will increase the use of aging facilities and idle land, and revise regulations related to redevelopment projects. The maximum floor area ratio for public rental housing over 30 years old will be raised to 500%. After reconstruction, these units will be re-supplied as integrated public rentals, with additional units allocated for sale, long-term leases, or integrated public rentals. The government expects that approximately 23,000 units can be started in the metropolitan area by 2030.

Idle state-owned and public land within urban areas, as well as government office buildings over 30 years old, will be subject to mandatory review for mixed-use development. The government will enact a special law covering procedures and incentives for local governments regarding mixed-use redevelopment of aging public office buildings. This is expected to enable the start of 28,000 units. The government will also introduce a special law to facilitate housing supply on existing idle land or unused school sites. To accelerate mixed-use development on idle land or state-owned/public land, the government may, if necessary, submit proposals to the Cabinet to exempt public institutions from preliminary feasibility studies.

The government will abolish the sunset clause on public urban mixed-use projects and increase the floor area ratio to speed up progress. It expects that 50,000 units can be supplied by 2030. For the redevelopment of aging planned cities, such as first-generation new towns, the project selection process will shift from a public contest to a resident proposal system, increasing supply. By addressing issues raised during the project process, the government expects to supply 63,000 units.

Regulations for redevelopment projects will be improved to allow project durations to be shortened by up to three years. To respond flexibly to changes such as rising construction costs, restrictions on building height and standards for green spaces will be relaxed. Incentives for private redevelopment and reconstruction floor area ratios will not be changed immediately but will be discussed publicly at a later date, due to concerns that they could drive up housing prices in some areas. By diversifying redevelopment regulations, the government expects to supply 234,000 units over five years.

In addition, the government will ease standards for outdoor noise and requirements for donating school sites, and will develop plans to utilize vacant commercial buildings in urban areas for housing supply. While starting construction on new purchase-type public rental housing and public-supported private rental housing that can be supplied in the short term, the government aims to supply half of the target volume next year and the year after.

Minister of Land, Infrastructure and Transport Kim Yoonduk stated, "We have prepared 'extraordinary supply measures' to fundamentally address the shortage of housing in the metropolitan area," adding, "We will expand the role of the public sector and strengthen implementation to enhance the stability of housing supply."