The financial authorities are enhancing funding for normal real estate project financing (PF) sites to expand housing supply. The Korea Housing Finance Corporation is increasing its public guarantees for PF, while closely managing financial challenges at 325 PF sites in the metropolitan area expected to start construction or be completed next year.
On September 10, Financial Services Commission Chair Lee Eok-won visited the Pungmu District urban development project site in Gimpo, Gyeonggi Province, to assess the PF funding situation and listen to financial and construction industry representatives about on-site financial difficulties.
This visit is a follow-up to the comprehensive financial measures announced on August 13 aimed at stabilizing the real estate market. The Financial Services Commission is strengthening financial support to ensure timely funding for normal projects while addressing issues at troubled sites in the real estate PF market.
The Pungmu District project is a large-scale urban development initiative covering approximately 870,000 square meters, expected to provide over 6,522 housing units. Initially, the project faced delays due to the real estate market downturn in 2022-2023 and uncertainties in the sales market, leading to increased financial burdens. However, with stabilized PF funding, the project has returned to normal operations.
The project developer, Hoban Construction, secured around 600 billion won through the Korea Housing Finance Corporation's PF guarantees. As construction costs and interest rates rose, they utilized the 'Construction Cost Plus PF Guarantee' to secure additional funding even after construction began. The Financial Services Commission views this as a successful example of financial support leading to actual housing supply.
Lee emphasized, "For rapid housing supply, there must be a proactive commitment from developers, seamless construction progress from contractors, reliable funding from private financial institutions, and supportive public guarantees from the Korea Housing Finance Corporation, all working together."
The Korea Housing Finance Corporation has increased its PF guarantee supply target for this year from 6 trillion won to 9 trillion won following the August 13 measures. It is also pursuing institutional improvements to promote housing supply, including new guarantee products for redevelopment and rental businesses.
Private financial institutions are also expanding their funding. KB Kookmin Bank CEO Lee Hwan-joo stated that the bank has handled approximately 4 trillion won in PF loans this year and is committed to actively supporting housing supply. Kookmin Bank plans to significantly increase its internal limits related to PF.
The financial authorities plan to strengthen management of PF sites in the metropolitan area for housing supply. Lee announced that they will closely manage the 325 PF projects expected to start construction or be completed next year. He also urged project managers to actively communicate on-site difficulties and suggestions through the financial and construction industry support center.
* This article has been translated by AI.
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