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| The city center seen from Namsan, Jung-gu, Seoul. 2021.2.4/News1 © News1 Reporter Eunna Ahn |
As the government offered unprecedented benefits, such as exemption from the redemption of excess profits (re-return), to the reconstruction project directly implemented by the public, there is a movement to change to this project in the public reconstruction promotion complex.
However, it is unlikely to be expected until the active participation of the Gangnam area complex. This is because the complex can secure sufficient business feasibility even if it does not promote the reconstruction of the public participation method.
According to the Junggok Apartment Reconstruction Promotion Committee on the 5th, the complex is positively considering the implementation of the’Public Direct Implementation Maintenance Project’ announced the day before by the government. Junggok Apartment, located in Gwangjin-gu, Seoul, is one of seven complexes that received prior consultation for public reconstruction. Recently, they also applied for in-depth consulting for public reconstruction.
However, the committee plans to switch to public direct implementation maintenance projects instead of public reconstruction. This is because, if this project is promoted, regulations such as re-recruitment and the obligation to live for two years for reconstruction members can be avoided. The public reconstruction announced last year by the government can benefit from the reduction of floor area ratio and floor number, but it is subject to reconstruction regulations such as re-return.
Public direct implementation maintenance projects refer to reconstruction and redevelopment under the premise of residents’ consent, and public enterprises such as Korea Land and Housing Corporation (LH) and Seoul Urban Housing Corporation (SH Corporation) directly implement and establish a project and sales plan. In addition to the exclusion of the obligation to re-initiate and live in the complex that promotes the project, it provides benefits such as an increase in the level 1 species of the use area and the application of 120% of the legal maximum floor area ratio.
An official from the promotion committee said, “It is true that our complex has not yet established a cooperative, so it was difficult to avoid the obligation to live for two years. If we carry out a direct public maintenance project, we can escape these regulations and increase the floor area ratio. It is advantageous,” he said.
The low donation rate is also a positive factor in improving business performance. Looking at the proportion of donations received from public direct implementation maintenance projects, reconstruction is 9% and redevelopment is less than 15%. It is 20 to 25% lower than that of private reconstruction and redevelopment. Public reconstruction should be donated up to 70% of the increased floor area ratio.
The promotion committee plans to apply for a public direct implementation and maintenance project through consulting with public institutions in the future with majority consent of the residents. After that, the project is confirmed when more than two-thirds of the residents agree. The business period is shortened to less than 5 years through prompt licensing. On the other hand, private reconstruction takes about 13 years from designation of maintenance zones to relocation.
Even in the Gangnam area, a positive response came out, saying that it was a “prospective measure” over the benefits offered by the government, such as exemption from re-invitation. However, it is unclear whether it will actually lead to public participation, considering the demand for residents who want to upgrade the complex through reconstruction.
Kim Seong-jin, head of the 19th reconstruction association of Shinbanpo, said, “It is positive that the government’s real estate policies such as reintroduction and exemption from capital gains tax are changing prospectively”. It is questionable whether there will be.”
The industry believes that the possibility of promoting projects in the form of public participation is low due to the nature of the Gangnam area reconstruction complex with sufficient business feasibility. The government is also making it clear that this project targets old complexes where it is difficult to promote reconstruction because it is difficult to secure business feasibility.
The Ministry of Land, Infrastructure and Transport has selected 67 sites in Seoul alone as priority areas for public direct implementation and maintenance projects. By region, △25 places in the southeast area △9 places in the northeast area △10 places in the downtown area △1 place in the northwest area △22 places in the southwest area.
Heung-jin Kim, head of the Ministry of Land, Infrastructure and Transport, said, “The first promotion review area is a place that outlined the places where the retirement is very severe or the project cannot be promoted in the current way.”
Experts point out that it is necessary to induce housing supply in large-scale complexes in the Gangnam area through policies to promote private reconstruction.
Go Jong-wan, head of the Korea Asset Management Research Institute, said, “It is unclear whether or not the participation in special large-scale apartment complexes such as Eunma Apartment and Jamsil Jugong Complex 5 due to the lack of measures to revitalize private reconstruction.” “It remains uncertain whether it can be properly supplied early,” he said.