The Korea Developer Association is establishing a 'Real Estate Development Equity Fund' to support developers facing initial funding challenges.
On September 3, the Korea Developer Association signed a memorandum of understanding with KB Securities to jointly create the fund aimed at revitalizing domestic real estate development finance and expanding new housing supply.
The two organizations plan to build a cooperative model to advance domestic development finance. This initiative is intended to assist small and medium-sized developers struggling due to project financing (PF) system reforms and bridge loan constraints.
The government recently announced measures to expand public guarantees, including those from the Housing and Urban Guarantee Corporation (HUG), to facilitate a smooth transition to project financing for normal business operations. Additionally, regulations on equity ratios for residential projects have been temporarily relaxed to reduce the initial capital burden on developers.
In line with these efforts, the Korea Developer Association aims to support the capital expansion of high-quality projects in the metropolitan area and stabilize the financial structure of development projects by reducing reliance on high-interest borrowing.
This fund creation marks the first achievement of the 'Financial Catalyst Fund' promised by Kim Han-mo, the chairman of the Developer Association, upon his appointment in February. He previously expressed his intention to bring stalled projects back on track due to a lack of initial capital, despite securing excellent project sites and permits.
The Developer Association will utilize its network of registered developers to identify on-site projects. KB Securities will assist with financial assessments and operational infrastructure to support project initiation and stabilization.
Kim stated, “This initiative will not only meet the public goal of expanding housing supply but also open new opportunities for our member companies and young talents aspiring to become developers. We will continue to establish the catalyst fund and work towards the long-awaited establishment of a mutual aid association in the industry.”
Moon Seong-cheol, head of KB Securities, remarked, “Leveraging our extensive experience in facilitating large landmark project financing and operational know-how, we will enhance developers' equity and create a stable financial structure. Through our partnership with the association, we aim to contribute to the smooth landing of the project financing market and the advancement of development finance.”
* This article has been translated by AI.
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