The government has expanded candidate sites for public maintenance projects, promising faster implementation than the private sector. However, experts warn that even with public leadership, a focus on project viability and execution design is essential.
Experts emphasize that the key issue is not the number of candidate sites but the 'conversion rate.' It is more important to create a structure that leads to project approval, management, and construction than to simply designate numerous sites. Even with public participation, if issues such as resident consent, project viability, construction costs, and shared expenses are not resolved, the supply effect will be limited.
Establishing a foundation for effective policy execution is also seen as an urgent task. Even if the government pushes for expanded direct implementation, without proper organization and legal frameworks, it will be difficult to accelerate project progress. Additionally, mechanisms to encourage resident participation need to be strengthened.
Shim Hyung-seok, a senior expert at the law firm Jooyul and a professor at IAU in the U.S., stated, "We need to first organize the entities responsible for direct implementation and finalize related legal amendments. This preparatory process alone will take considerable time."
Shim added, "In urban public housing complex projects, relying solely on floor area ratio incentives has its limits. Instead of pursuing projects centered on land acquisition, we should establish a structure where resident opinions are reflected in key decisions like pricing and contractor selection through resident committees, similar to private trust redevelopment projects."
There is also a need to enhance project viability. With recent significant increases in construction and financing costs, maintaining resident consent becomes challenging if the profit structure does not align. If public contributions and donation burdens become excessive, public maintenance projects will struggle to gain momentum, similar to private redevelopment projects.
Kim Deok-rye, head of the Housing Policy Research Division at the Korea Housing Industry Institute, remarked, "LH cannot continue projects at a loss just because it is a public entity. Even when pursuing public-led projects in urban areas, it is crucial to ensure that public contributions and donations are not excessive to maintain an appropriate level of profitability."
Analysts also suggest that expanding public supply must go hand in hand with restoring the private supply base. Even if the public supplements certain projects, if the private supply and demand markets do not normalize together, the stabilizing effect on the market may be diminished.
Kim emphasized, "For the effects of LH's supply expansion to materialize, both the private supply and demand markets must normalize. While loan and tax regulations may suppress demand in the short term, it is essential to restore the foundation for private supply in the long term."
There are calls to enhance public-private collaboration. The public should ensure public interest and procedural stability, while the private sector should complement funding and construction management capabilities to maximize supply expansion effects.
Song Seung-hyun, head of Song Seung-hyun Real Estate Research Institute, noted, "Given the growing public resentment towards government initiatives, it is crucial to emphasize collaboration between public and private sectors rather than solely focusing on public-led efforts. Since there is a perception that public involvement diminishes project viability, securing incentives to offset this is vital."
Song added, "To encourage private participation, it is essential to determine how actively we can support loans and how flexibly we can adjust floor area ratios to secure construction costs. Policy-wise, flexibility tailored to project conditions is necessary."
* This article has been translated by AI.
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