Will The Resumption of Heavy Capital Gains Tax Change the Game... Capital Flocks to Land Investments

The government has reaffirmed its policy to end the temporary suspension of heavy capital gains tax on owners of multiple homes on May 9, heightening tension in the real estate market. Analysts say that if the burden of higher tax rates upon sale becomes a reality, housing investment strategies aimed at short-term gains will inevitably be put under serious constraints.

In particular, as various regulations on lending, property holding tax, and housing subscriptions are working in combination, especially in the greater Seoul area, a perception is spreading among investors that "apartments are no longer assets that you simply buy and sell, but structural assets for which you must factor in tax considerations."

As the housing investment environment centered on apartments is once again shifting toward stronger regulations and heavier tax burdens, investors are beginning to move toward changing their asset strategies. In particular, land assets, which are not counted toward the number of residential units and are therefore excluded from heavy capital gains taxation, are being re-evaluated as a means of preserving long-term value.

For example, in the case of planned land, its use and development potential are clearly defined, and it is equipped with necessary infrastructure conditions, leading to assessments that development risk is low. According to statistics such as the nationwide land price index, land has shown a clear tendency to trend upward over the long term, and observers point out that its appeal as a real asset continues even amid financial market volatility.

Against this backdrop, the land lots for sale in Jeonju Ecocity, known as “Chaebiji” (land owned by public entities for cost recovery), are drawing attention as an alternative investment destination. These Chaebiji lots, supplied as national and public land within Ecocity in Jeonju, are viewed as having improved utility and business viability following the recent final notification of changes to the district unit plan. Under the revised plan, quasi-residential sites, block-type single-family housing sites, and religious facility sites have seen additional permitted uses and relaxed approval standards, and in some blocks, residential functions have been allowed, thereby expanding the scope of land utilization.

The Chaebiji lots currently being supplied total 62 parcels, consisting of 51 quasi-residential parcels and 9 parking lot parcels. On the quasi-residential sites, buildings for a wide range of uses can be constructed, including officetels, commercial facilities, medical facilities, and educational facilities, and for some parcels, consolidation of up to three parcels is permitted, offering significant flexibility in land utilization.

Jeonju Ecocity is an area where infrastructure within the urban development zone has already been completed, and the land is supplied as planned land with roads, an established permitting system, and district unit plan guidelines in place. These conditions help lower the initial entry barrier for land investment and are drawing attention from both end-users and investors in terms of long-term asset value preservation and utilization potential.

In fact, residential products previously offered for sale within Ecocity recorded high competition ratios and sold out completely, and there are assessments that this Chaebiji offering combines both scarcity and stability, as it is the last batch of public Chaebiji supply within Ecocity.

A real estate expert said, "The resumption of heavy capital gains taxation on owners of multiple homes is expected to serve as an important turning point in decisions on housing transactions," adding, "Land such as the Chaebiji in Ecocity carries relatively low tax risks and offers value from a long-term holding perspective, so it is likely to play an important role in future investment portfolios."