Seoul is facing a significant housing shortage, with no public redevelopment projects having commenced construction despite government promises to address supply issues. Six years after the introduction of the public redevelopment system aimed at revitalizing stagnant urban areas, concerns are growing that designated sites are not translating into actual construction and occupancy.
According to a report from Zigbang on July 7, the number of apartments scheduled for move-in in Seoul this year is projected to be 16,412, a 48% decrease from the previous year. Of this total, 87% is reliant on redevelopment and reconstruction projects. With most of the anticipated apartment supply depending on these redevelopment efforts, the failure of public projects to break ground could exacerbate future housing shortages and instability in the rental market.
Public redevelopment was introduced with the aim of quickly revitalizing aging urban areas, involving the Korea Land and Housing Corporation (LH) and the Seoul Housing and Communities Corporation (SH) as implementing agencies. The initiative promised various incentives, such as increased floor area ratios, exemptions from price caps, integrated reviews, and project financing, with the goal of reducing the typical 10-year redevelopment timeline to around five years.
However, the results have fallen short of expectations. According to the Seoul city’s redevelopment project information, none of the 35 selected public redevelopment sites have begun construction. Furthermore, none have reached the management disposal approval stage, with only three sites—Sinseol 1, Yangpyeong 13, and Geoyeong Saemaul—having received project implementation approval.
The bottleneck is evident not just at the construction stage but also in earlier phases. Among the 35 public redevelopment sites, 14 remain at the stage of establishing associations. In the public implementation model, the formation of resident representative councils and the designation of LH and SH as implementing agencies occur simultaneously, but many areas are failing to progress to project implementation approval. This highlights the challenge of translating site selection and agency designation into actual supply.
The first pilot projects, selected in 2021, have also struggled to gain momentum. More than five years later, none have begun construction. The fastest among them, the Sinseol 1 area, is expected to receive project implementation approval in 2025, with construction slated for 2027 and completion in 2029. According to government plans, this year should have marked a point where move-ins were becoming visible, yet the reality remains that projects are still in pre-construction stages.
The government maintains that public redevelopment is not particularly slower than private redevelopment. It argues that both processes require significant time from the decision of redevelopment plans to project implementation approval. However, critics argue that since public redevelopment is being promoted as a supply solution, it should be evaluated based on actual construction conversion rates rather than the number of designated sites.
Factors contributing to the stagnation include issues with consent and project viability. While public redevelopment has lowered the threshold for entry with a low initial consent rate, if opposition exceeds a certain level, it can lead to project reassessment or cancellation, jeopardizing project stability. The Kumho 23 area, for instance, was removed from public redevelopment due to opposition rates exceeding 30%, transitioning to a private rapid integration planning model.
Rising construction costs, labor expenses, and financing costs in recent years have also added to the burden. Additionally, conditions related to public contributions, donations, and securing public interest further complicate the viability of public redevelopment projects. Even with public agencies involved, if member contributions decrease and project viability is not assured, maintaining resident consent becomes challenging. The presence of public agencies does not automatically resolve conflicts or viability issues.
Public reconstruction efforts are also facing limitations in expansion. While some areas among the five leading projects have progressed to project implementation or planning stages, none have reached the construction phase. Profitable reconstruction sites tend to favor private methods, while public reconstruction often involves structural limitations, such as road penetration, excessive floor area ratios, and long-term disputes, making self-driven initiatives difficult.
Ultimately, the issue with public redevelopment lies not in a lack of site discovery but in the failure to transition to construction. Even with public participation in redevelopment projects that have struggled to progress under private methods, issues related to consent, project viability, member contributions, and construction costs must be resolved for actual supply to materialize.
Yang Ji-young, a specialist at Shinhan Premier Pathfinder, stated, "The conversion rate to actual construction is more important than the number of designated sites. Without a structure that ensures project viability, it is difficult for public agencies to accelerate progress."
* This article has been translated by AI.
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