Kim Ian, a 31-year-old office worker, has been closely examining banners for redevelopment projects in his neighborhood on his way home from work. With his lease nearing expiration, he is contemplating whether to purchase a multi-family or apartment building in an area with development potential. He noticed phrases like 'Moa Town Promotion' and 'Opposition to Urban Complex Projects.' Kim said, "Both seem like projects to replace old housing with new apartments, but I don't understand why the residents' reactions differ."
Amid a housing supply crisis, interest in small-scale redevelopment projects utilizing aging residential areas in Seoul is growing. These projects can present opportunities to purchase valuable villas. However, many find the variety of project types confusing. From street housing redevelopment to Moa housing, Moa Town, long-term rental housing near transit stations, transit-oriented development, urban public housing complex projects, and private urban complex development projects, the names are often similar. What are the differences among these small-scale redevelopment projects?
What are the types of small-scale redevelopment projects?
Small-scale housing redevelopment projects are based on the Special Act on the Maintenance of Vacant Houses and Small-Scale Housing. Under current legislation, they are divided into autonomous housing maintenance projects, street housing redevelopment projects, small-scale reconstruction projects, and small-scale redevelopment projects.
The autonomous housing maintenance project involves homeowners forming a community to renovate aging houses, while the street housing redevelopment project maintains existing street areas while upgrading old homes. Small-scale reconstruction projects target small multi-family housing, and small-scale redevelopment projects focus on small sites in transit areas or semi-industrial zones.
In terms of scale, street housing types are under 20,000 square meters, small-scale redevelopment types are under 5,000 square meters in transit or semi-industrial areas, and small-scale reconstruction types are under 10,000 square meters with fewer than 200 housing units.
These small-scale redevelopment projects have the advantage of being able to proceed relatively quickly due to simplified procedures compared to general redevelopment. However, the smaller scale may limit the amount of units available for general sale, and rising construction costs or decreased project viability could lead to increased financial burdens for members of the association.
What is Moa Housing? What is Moa Town?
Moa Town is a small-scale housing maintenance method promoted by the Seoul city government targeting low-rise residential areas where traditional redevelopment projects struggle to secure viability. It features the collective redevelopment of multiple plots to improve the living environment. The city plans to reduce the time from project initiation to construction from the typical six years to four and a half years for Moa Town projects.
Moa housing refers to a small-scale housing maintenance project where owners of low-rise residential areas collectively develop adjacent plots. Moa Town combines several Moa housing projects, allowing the city to establish management plans and improve infrastructure such as roads, parking lots, and parks. To enhance the viability of individual projects within Moa Town, the city offers urban planning incentives like zoning upgrades and relaxed floor area ratios, along with support for infrastructure improvements.
Similar names, different purposes: Transit-Oriented Development
Several small-scale redevelopment projects are labeled as 'transit-oriented.' These include transit-oriented development, long-term rental housing near transit stations, and youth housing, which may appear similar but serve different purposes and operate under distinct frameworks. For instance, the transit-oriented development project aims to increase development density around transit stations by upgrading zoning, securing public contributions. In contrast, the long-term rental housing project provides incentives like increased floor area ratios to private developers, who must allocate a portion of their profits to supply long-term rental housing.
Youth housing is a separate initiative that supplies rental housing for young people and newlyweds in transit areas. In the case of private rental types, private developers implement and operate the projects, and public and publicly supported private rentals may be mixed within the same complex.
Public vs. Private in Urban Public Housing Complex Projects
In the case of 'urban complex projects,' it is essential to distinguish between 'public' and 'private' initiatives. These projects aim to supply quality housing in areas where traditional private development is challenging, such as transit zones and low-rise residential areas.
The 'public urban complex project' involves public institutions like the Korea Land and Housing Corporation (LH) and the Seoul Housing and Communities Corporation (SH) as participants. These projects enhance viability through various incentives like increased floor area ratios and streamline some procedures, accelerating project timelines.
Conversely, 'private urban complex projects' are led by private entities such as trusts or REITs instead of public institutions. Under the 'Urban Complex Development Act' enacted in February last year, designated urban complex development innovation districts can apply regulatory exceptions like relaxed floor area ratios to enable mixed-use development of residential, commercial, and office facilities.
Shin Bo-yeon, a professor at Sejong University’s Department of Real Estate AI Convergence, stated, "It is crucial to comprehensively consider the valuation criteria date, public contributions, additional financial burdens, and regulatory applications. Purchasing before the valuation date can yield development premiums, but it may also become subject to regulation during speculative surges. Rather than solely relying on floor area ratios, it is essential to verify the actual viability of the project."
* This article has been translated by AI.
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