The project to designate leading zones for the renewal of aging planned cities, which drew strong responses in the greater Seoul area including the first-phase new towns, is failing to make waves in the provinces. With local real estate markets in a slump, residents outside the capital region are taking a reluctant stance toward carrying out renewal projects for aging planned cities while paying additional cost shares.
According to the maintenance industry and others on the 7th, the aging planned city renewal project develops areas that were created through housing site development and the like, have passed 20 years since creation, and are at least 1 million square meters. Unlike reconstruction and redevelopment, it is linked with urban development to additionally expand transportation, parks, and cultural infrastructure.
The leading zones for aging planned city renewal were first implemented for the first-phase new towns in the capital region but were expanded nationwide with a legal revision. The first-phase new towns saw high competition rates, drawing strong responses such as backlash from areas not designated, and complexes that were eliminated later prepared for additional selection. In Busan, 32,000 households vied for 5,700 slots, recording a competition rate of 5.7 to 1.
According to the Ministry of Land, Infrastructure and Transport, the local governments that have begun establishing basic plans for aging planned city renewal projects currently total 12: Seoul, Busan, Incheon, Daejeon, Ulsan, Suwon in Gyeonggi, Yongin in Gyeonggi, Ansan in Gyeonggi, Jeonju in North Jeolla, Gimhae in South Gyeongsang, Yangsan in North Gyeongsang, and Chungju in North Chungcheong.
An official at the Ministry of Land, Infrastructure and Transport (MOLIT) said, "The aging planned city renewal law aims to provide incentives, such as floor area ratio benefits, to enable systematic renewal projects because problems can arise if areas that were supplied on a large scale in the past undergo renewal all at once in a short period, and because infrastructure expansion is needed," adding, "Each local government is in the stage of conferring with residents while considering local conditions to decide whether it is better to proceed under the aging planned city renewal law or to carry out a general renewal project."
In addition to the local governments that have begun establishing basic plans, more local governments are expected to emerge that will proceed to establish basic plans depending on feasibility studies and resident responses. Notably, Changwon is reportedly conducting a feasibility study for the aging planned city renewal project.
However, in the provinces, there is feedback that it is difficult to reach resident consensus because the project is less profitable. Interest is low due to weak demand for renewal projects, and there is a view that conditions differ from the large-scale housing sites developed in the past under public leadership, as in the first-phase new towns in the capital region.
In particular, unlike the first-phase new towns, where various restrictions make redevelopment and reconstruction difficult, the provinces can sufficiently provide new supply through reconstruction projects, and given the buildup of unsold homes, demand may not be large, some noted. According to the Ministry of Land, Infrastructure and Transport's Statistics Korea portal, as of September this year, 84.4% (22,992 households) of unsold homes after completion, known as chronic unsold inventory, were in the provinces.
An official at A Real Estate Agency in Changwon said, "Hardly any sales transactions are taking place, so even if we are selected as a leading zone for aging planned cities, there is little sense of anticipation," adding, "If anything, if selected as a leading zone, some residents are likely to worry about how much the additional cost share will be."
Experts also explained that weak willingness to pursue renewal projects in the provinces could make progress difficult. Song Seung-hyeon, head of Urban and Economy, said, "There is a need to renew aging dwellings, but in the provinces, expectations for price increases ultimately weaken, and the willingness or desire for renewal projects is weak, so feasibility inevitably suffers. The buildup of unsold homes is also a problem," adding, "However, if projects proceed under the special law on aging planned city renewal, they can move faster, and incentives and other advantages are prompting local governments to consider it. Still, even such a special law seems unlikely to bring a major shift in the overall mood."