On the 4th, the Seoul Metropolitan Government announced that it is considering the introduction of a 'regional coexistence REITs' that allows local residents to directly participate in major projects such as the Yongsan International Business District urban development project and share in the development profits.
Real estate investment trusts (REITs) are companies that pool funds from many investors to invest in real estate and distribute profits. They publicly offer more than 30% of their total shares to a general audience regardless of locality, which has limited the redistribution of development profits to local residents rather than external investors.
The regional coexistence REITs that Seoul is contemplating will differ from existing REITs in that, if deemed necessary by the Minister of Land, Infrastructure and Transport, priority can be given to local residents for public offerings. The core concept is designed to ensure that development profits in the local area are directly returned to local residents.
With the legal basis established by the amendment of the Real Estate Investment Company Act in May, the Seoul Metropolitan Government plans to collaborate with the Seoul Housing and Development Corporation (SH Corporation), Seoul Asset Management Corporation (AMC), and others to create an environment where local residents can safely participate in investments.
The Yongsan International Business District is being considered as a target for application. The Seoul Metropolitan Government plans to promote 'citizen companion development' where citizens can participate directly and share in the project outcomes and profits, focusing on the B9 site (proposed) that SH Corporation will develop directly within the Yongsan International Business District.
Additionally, the Seoul Metropolitan Government is reviewing the introduction of regional coexistence REITs for various development projects, including public land that it is directly developing or selling and public land with low utilization for public-private partnership projects.
In particular, the application of regional coexistence REITs is being explored in various ways for facilities needed in the community and income-generating public assets that have been difficult to establish due to resident opposition.
An institutional foundation suitable for the circumstances of Seoul will also be established. Rather than focusing on regulations, various incentives will be considered to encourage voluntary participation from the private sector.
In the second half of this year, the Seoul Metropolitan Government plans to analyze the feasibility of the project and select a pilot project, preparing public offering guidelines for regional coexistence REITs in 2026 and conducting public offerings for operators to promote pilot projects starting in 2027.
A plan to digitize real estate assets through the issuance of securities-type tokens (STO) using blockchain technology will also be pursued.
Im Chang-su, a director at the Seoul Metropolitan Government's Future Space Planning Office, noted, 'Regional coexistence REITs are a new attempt to transform development profits that had been concentrated in the hands of a few into a shared domain for citizens.' He added, 'We will realize the beginning of companion development created together with citizens.'