Trust companies and private operators of real estate investments, such as real estate investment trusts (REITs), will also be able to supply dwellings in urban areas with aging infrastructure, such as near subway stations. Benefits such as increased floor area ratio and site coverage ratio will be provided. However, some of the units supplied through development projects must be allocated as public housing.
The Ministry of Land, Infrastructure and Transport noted on the 7th that the enforcement decree and regulations of the 'Urban Complex Development Support Act' will be announced and enacted, which provides incentives to private operators participating in urban public housing complex projects.
The complex development project, introduced in 2021, is aimed at strengthening urban competitiveness and providing housing quickly by creating growth hubs and has been advancing high-density development by offering benefits such as increased floor area ratios. Until now, public institutions like the Korea Land and Housing Corporation (LH) have led these efforts.
With the establishment of the enforcement decree and regulations, trust companies and real estate investment trusts (REITs) can also participate as project implementers. The Ministry of Land expects that utilizing the expertise and creative capabilities of the private sector will enhance community acceptance.
Complex development projects are classified into 'growth hub type,' aimed at creating growth hubs within cities, and 'residential-centered type,' aimed at the swift provision of dwellings.
The enforcement decree specified the target areas where projects can be implemented by type. The growth hub type targets areas within 500 meters of central urban, sub-urban, or community zone locations, where two or more public transport routes such as subways, railways, and express buses intersect, regardless of their level of deterioration.
The residential-centered type can be implemented in areas where more than half of the site area is located within 500 meters from the boundary of subway stations or in areas where over 40% of buildings have aged more than 20 years in quasi-industrial zones.
To encourage active participation from private implementers such as trust companies and real estate investment trusts (REITs) in the complex development project, regulatory exemptions related to site coverage ratio and floor area ratio will be granted.
The growth hub type can be designated as an 'urban innovation zone' under the National Land Planning Act. If local governments determine that innovative space creation is necessary in urban areas, they can set these zones without imposing restrictions on land use for residential, commercial, or industrial purposes, allowing for free determination of floor area ratios and site coverage ratios.
Even if not designated as an urban innovation zone, under the enforcement decree, the site coverage ratio can be relaxed up to the legal maximum by land use type, and in quasi-residential areas, the floor area ratio can be relaxed up to 140% of the legal limit.
Meanwhile, project implementers must provide part of the development profits obtained through regulatory exemptions to the public in the form of public housing, infrastructure, and community service facilities. In particular, a certain percentage of the dwellings constructed through the complex development project will be provided as public housing to activate the supply of public housing within urban areas.
The growth hub type must provide public housing at a rate determined by city and provincial ordinances, which is not to exceed 50%, while the residential-centered type must provide it within a range of 30% to 50%.
Kim Bae-sung, head of the public housing promotion team at the Ministry of Land, Infrastructure and Transport, said, "With the implementation of the Urban Complex Development Act, as complex development projects are expected to be fully activated, we anticipate that the creative capabilities of the private sector will contribute to enhancing urban competitiveness and achieving housing stability," and added, "After the law's implementation, we will continuously gather opinions from relevant organizations, including local governments and project implementers such as trust companies and real estate investment trusts (REITs), to ensure that complex development projects proceed without issues."