Government to Fully Expand 'Modular Housing'... Suitable for Rentals, Premature for Sales [Real Estate AtoZ]

Government to Fully Utilize Modular Housing as a 'Rapid Supply Model'
LH Pursuing 2,261 Units Across 12 Districts Nationwide... 768 Units Already Completed
Construction Period Reduced by 30-50% and Enhanced Safety... Effective for Rental Housing

The government has placed modular housing at the forefront of its September 7 real estate policy as a way to accelerate housing supply. However, critics point out that there are still clear technological, cost-related, and institutional limitations. Nevertheless, there are also expectations that modular housing could become a new supply paradigm, given its potential to halve construction periods, ensure both safety and eco-friendliness, and offer significant future market expansion-provided that institutional improvements and increased private sector participation follow.

Samsung Electronics' smart modular home solution exhibited at IFA 2025 held in Berlin, Germany. Samsung Electronics.

According to the Ministry of Land, Infrastructure and Transport on September 9, Korea Land and Housing Corporation (LH) is currently pursuing modular housing projects across 12 districts, totaling 2,261 units. In six districts, including Yongho in Busan and Dujeong in Cheonan, 768 mid- to low-rise modular housing units have already been completed. In six other districts-such as Chopyeong A4 in Uiwang (22 floors, 381 units) and Doyang in Goheung (15 floors, 150 units)-mid- to high-rise modular projects totaling 1,493 units are underway.

The modular construction method involves pre-fabricating more than 70% of building components-including walls, windows, plumbing, and bathrooms-in a factory, then assembling them on-site. The Ministry explains that this approach can reduce construction periods by 30% to 50% compared to traditional reinforced concrete (RC) methods. An apartment project that would typically take 24 months can be completed in just over a year. With fewer workers required on-site, the risk of safety accidents is lower, and there are also environmental benefits such as reduced construction waste and carbon emissions. A Ministry official stated, "We believe modular construction can be prioritized for new public rental housing (140,000 units over five years) and public-supported private rental housing (21,000 units over five years)."

However, there are also clear limitations. With current domestic technology, modular buildings cannot meet the three-hour fire-resistance standard required for structures over 13 floors, making it difficult to build taller buildings. This creates a significant gap with the demand for large apartment complexes in urban areas. While modular housing is feasible for rental supply, it is still premature for the sales market. In addition, construction costs are 20% to 30% higher than RC methods, making profitability difficult to achieve. The pre-sale-oriented nature of the domestic market also offsets the advantages of modular construction. In a pre-sale structure, shorter construction periods mean shorter intervals for interim and final payments, making modular housing less attractive to consumers who need to prepare large sums of money in a short period of time.

Unlike advanced countries overseas, where high labor costs and workforce shortages have made modular construction an early alternative, South Korea has relied on foreign workers to meet on-site demand, reducing the urgency for technological advancement. Nevertheless, construction companies are moving quickly to secure future growth opportunities, even if the market is not immediately profitable. In Europe and North America, modular methods account for more than 20% of all construction.

Recently, the construction division of Samsung C&T unveiled a "Smart Modular Home" in collaboration with Samsung Electronics at IFA 2025, a German home appliance exhibition. This next-generation residential space integrates Samsung Electronics' artificial intelligence (AI) home solution into a 218-square-meter modular home built by Samsung C&T. In April, GS Construction succeeded in a technology demonstration for modular apartment buildings over 30 floors in Eumseong, North Chungcheong Province. Two years ago, Hyundai Engineering completed Korea's first 13-story modular "Happy Housing" project, which was the tallest of its kind at the time.

The government and the National Assembly are also working to provide institutional support. The National Assembly's Land, Infrastructure and Transport Committee is currently discussing an amendment to the Housing Act that would relax building coverage and floor area ratios for modular housing by 15% compared to conventional housing, aiming to improve private sector profitability. The amendment also includes changing the legal term from "industrialized housing" to "prefabricated architectural housing" and expanding the scope to include quasi-residential buildings such as lodging facilities and officetels. The government is even considering enacting a "Modular Special Act" to resolve conflicts with existing construction regulations, recognizing that large-scale adoption is difficult without an institutional foundation.

Experts note that while modular housing is still an early-stage market in Korea, it could eventually expand to the sales market as more experience is accumulated. Cho Bongho, a professor in the Department of Architecture at Ajou University, commented, "Modular construction offers significant advantages in terms of eco-friendliness and safety, but the domestic market is still too small for cost competitiveness." He added, "If the government expands public projects through this policy and stabilizes the industry ecosystem, and if costs are reduced through economies of scale, there could be a major shift in the supply paradigm in the future."