The project to build new dwellings by grouping low-rise residential areas dense with old houses into several parcels is expected to gain momentum.
On the 19th, the Seoul Metropolitan Government announced a plan to promote the Mowajutaek and Mowatown projects, which were introduced in 2022. At the same time, it selected the area of Hyunhyeondong 1-5, also known as 'Ddonggol Village', which had been left unlicensed for 20 years, as the first target site.
Since its introduction in 2022, 116 Mowatown projects are currently underway. The Mowajutaek has received approval for the establishment of associations for 34,811 households across 166 locations. The Seoul Metropolitan Government has exceeded its initial target of 30,000 dwellings by 2026.
First, the 'business viability correction factor,' which was previously applied only to large-scale redevelopment and reconstruction, will be introduced to Mowajutaek to enhance its business viability. The business viability correction factor is a tool designed to improve the viability of business sites with land prices lower than the Seoul average by increasing the floor area ratio. The lower the land price of the business site, the higher the correction factor is set, which can lead to a reduction in rental dwellings and an increase in the volume of general sales.
Currently, 93% of the ongoing Mowatown projects are located in areas with land prices below the Seoul average, so most business sites are expected to benefit from the application of the business viability correction factor.
The Seoul Metropolitan Government stated that after applying a business viability correction factor of 1.5 to 12 Mowatown locations, its own simulation indicated that the proportional rate would increase by an average of 13 percentage points, and the average contribution amount for residents would decrease by 70 million won.
Additionally, areas with excellent infrastructure such as main roads and transit-oriented development will be elevated to sub-residential areas, allowing for the additional supply of 7,000 dwellings. Development will also be possible in the surrounding areas, which is expected to increase the supply of housing and improve business viability.
Financial support to secure initial momentum for the project will also be expanded. First, the Seoul Metropolitan Government will provide direct loans of up to 2 billion won for the initial operating and service costs of Mowajutaek associations. Approximately 70% of the project cost, which consists of construction costs, will be loaned at a lower rate of 0.6% compared to the Korea Housing & Urban Guarantee Corporation (HUG) through collaboration between the Seoul Metropolitan Government, the Seoul Housing & Communities Corporation (SH), and financial institutions.
The administrative procedures will also be expedited. The previously bifurcated management plans for Mowatown and architectural plans for Mowajutaek will be established in parallel, reducing the project planning period by up to one year.
Additionally, the Seoul Metropolitan Government and autonomous districts plan to directly support technical areas required for business analysis, the establishment of associations, outline architectural plans necessary for agreement to establish associations, and estimation of contribution amounts to further reduce the required project duration by an additional year.
Moreover, SH will expand its provision of precision diagnostic analysis services regarding business viability not only for urban planning regulated areas but also for Mowatown and Mowajutaek. Recruitment for the target areas will occur in the second half of the year.
Mayor Oh Se-hoon visited the area of Hyunhyeondong 1-5, the first target site for Mowajutaek activation, and announced the activation plan.
The area of Hyunhyeondong has accumulated a 72.1% agreement rate for association establishment since the approval of the Mowatown management plan last June, and it is expected to undergo approval for association establishment in October, integrated review in March next year, project implementation plan approval in September, and commence construction in December. The goal is for 366 households to be completed by December 2029, with occupancy expected within five years.
Among the more than 20 households (33 people) currently residing there, some are basic livelihood recipients and low-income earners, so the city plans to induce tenant-customized protective measures, such as providing land-use incentives to the association when compensating for tenant losses.
Mayor Oh said, 'Mowajutaek and Mowatown represent the Seoul Metropolitan Government's innovative approach to resolving the problems of aging low-rise residential areas that have not progressed in development.' He added, 'While we have focused on selecting and expanding Mowatown to build a foundation for housing supply, we will now concentrate on supplying Mowajutaek effectively and more quickly.'