A government program to build quality housing in built-up urban districts has finished selecting candidate sites after about three years, yet the market is watching quietly. Although officials say public-sector leadership will speed up the work, development expectations were already priced into asking prices while private redevelopment efforts were under way, leaving little sign of buyers piling in or listings drying up. Caution is also evident as projects face the twin hurdles of securing owner consent and delayed permits from the Seoul city government.
Around Mangwon Market and Mangwon Sports Park in Seoul's Mapo District, visited on the 12th, there was little sense of anticipation even after the area was named a candidate site for the urban public housing complex program by the Ministry of Land, Infrastructure and Transport on Sept. 30 and then designated a Rapid Integrated Planning redevelopment site by the Seoul city government on Oct. 1.
The head of one licensed brokerage inside Mangwon Market said the public complex program had only just been selected and would take at least 10 years to bear fruit. "There hasn't been a single inquiry or listing related to the urban public housing complex program, while you can find listings tied to the Rapid Integrated Planning project," the broker said. The head of another nearby brokerage said speculative players had worked the area in the past, collecting owner consent forms and cashing out their gains. "I knew about the Rapid Integrated Planning designation, but I didn't know about the urban public housing complex selection," the broker said.
The area near Isu Station in Seocho District, the first site in the Gangnam area to be picked as a candidate for the program, is also subdued. An official at a local brokerage said prices had already climbed as far as they could because other redevelopment projects had been moving ahead steadily. "A 7- or 8-pyeong unit goes for 1.8 billion won [about $1.3 million], so it's not something I'd particularly recommend," the official said.
The urban public housing complex program has public institutions such as Korea Land & Housing Corporation lead the redevelopment of aging residential areas where weak profitability makes private redevelopment or rebuilding difficult, with incentives such as higher floor area ratios. It skips steps such as forming a redevelopment association and drawing up a management disposal plan, allowing the public sector to move faster.
Even so, the limited interest in designated areas reflects the fact that existing project sites elsewhere have stalled over administrative procedures at the Seoul city government, analysts say. Authority to designate districts under the program rests with the land ministry, while follow-up permits are handled by the Seoul city government, and the two bodies prioritize different projects, slowing progress. After a district is provisionally designated, consent is also required from more than two-thirds of landowners and other property owners, as well as owners of more than half of the land area.
The land ministry plans to hold briefings for residents of the newly named candidate sites from late this month as scheduled, aiming to build interest. Yoon Ji-hae, a real estate commentator, said the government does not verify owner consent rates before making announcements, so many residents are likely unaware of the designations. "The public sector stepped in because these projects had been delayed by various obstacles, and it remains to be seen whether the incentives will serve as a real driver," Yoon said.