"To Expand Housing Supply in Seoul, Public Funding Must Accelerate Maintenance Projects" [Real Estate AtoZ]

Seoul Holds "2025 Seoul Housing Forum"
Half of Designated Districts Remain in Early Project Stages
Only 39 Districts Expected to Supply Housing by 2029
Public Support Measures Proposed to Stimulate Housing Supply

There have been calls for support measures to accelerate the pace of maintenance projects and new funding methods such as a housing promotion fund, in order to lay the groundwork for expanding housing supply in Seoul.

On the 27th, at the Press Center in Jung-gu, Seoul, Ji-Hyun Lee, Director of Urban Maintenance at the Korea Research Institute for Human Settlements, gave a presentation on the theme "Seoul-style Maintenance Projects: A New Driving Force for Housing Supply and the Construction Industry" at the "2025 Seoul Housing Forum." Photo by Jinju Han

On the 27th, at the 2025 Seoul Housing Forum held at the Press Center, Ji-Hyun Lee, Director of Urban Maintenance at the Korea Research Institute for Human Settlements, gave a presentation on the theme "Seoul-style Maintenance Projects: A New Driving Force for Housing Supply and the Construction Industry." Lee pointed out, "In aging areas where low profitability weakens the drive for projects, it is urgent for the public sector to actively inject resources and intervene strongly in both the feasibility and speed of project implementation."

Lee stated, "To overcome the current limitations, where large-scale maintenance projects rely on construction companies' payment guarantees and small-scale projects depend on public project financing, we need new public-private funding methods that leverage the dynamism of the capital market." She added, "It is necessary to establish a cooperative partnership in which the public sector provides institutional and financial support so that the private sector can realize public values."

Although maintenance projects such as redevelopment and reconstruction are the only viable solution to the housing supply shortage in Seoul, most remain in the early stages. Of the 283 districts that have passed the designation stage, 52% (146 districts) are still before the project implementation approval stage, and only 39 districts are expected to reach the construction stage and be able to supply housing by 2029. Of the 46,000 housing units at the construction stage, only 15,000 units are available for general sale.

In addition, due to increased expenditures such as construction and financial costs not being recovered through general sale prices, there is an inevitable structure in which association members' contributions sharply increase. To speed up maintenance projects, utilizing the expertise of public agencies to compensate for the lack of expertise within associations was also presented as a solution.

Lee explained, "A new structure is needed in which specialized institutions with design, implementation, and management capabilities, such as LH or SH, bring together the expertise of public agencies in areas such as appraisal and finance to support the entire process. By adopting an integrated project management system (RM: Redevelopment Management) that encompasses administrative support, such as acting as an agent for construction cost negotiations, managing schedules and processes, supervising construction quality, conducting accounting audits, reviewing contracts, and providing licensing consultations, it will be possible to accelerate the start of construction."

If Seoul secures its own housing fund, strategies such as creating a public-private partnership model that combines equity investment and securitization have also been proposed to link maintenance projects and finance. By dispersing risk through equity investment, securing funds through securitization, and strengthening credit with public guarantees, it would be possible to stably secure funding.

Jihaeng Heo, President of the Housing and Urban Finance Research Institute at HUG, explained, "If Seoul directly establishes a real estate investment trust (REIT) or creates a specialized securitization company, it will be possible to ensure smooth funding and cash flow. If stable housing supply is achieved through a professional asset management company (AMC), it will greatly benefit the national economy. However, more discussion is needed to make this a reality."

Seoul Mayor Oh Sehoon announced last July a plan to create a "Seoul Housing Promotion Fund" worth 2 trillion won over the next 10 years. The plan is to use this fund to strengthen housing welfare for real demand groups such as young people, newlyweds, and the elderly.

Sachang Hoon, Director of Housing Policy at the Seoul Metropolitan Government, said, "We expect the fund to serve as a catalyst for large-scale private investment, with significant ripple effects. The fund will be used to enhance project viability, including land purchases for youth safe housing, low-interest loans, secondary support for construction costs, and loans for maintenance projects." He added, "We expect to supply youth safe housing for 2,500 households and support 40 maintenance projects."