The trend of more developer (real estate project operator) closures than startups has continued for a third year. The industry has deteriorated rapidly due to a construction slump, soaring construction costs, and tighter regulation.
According to statistics on real estate developer registrations from the Ministry of Land, Infrastructure and Transport on the 5th, as of the end of 2025 there were 2,284 registered developers nationwide, down 124 from a year earlier. During this period, 156 developers newly registered, but an even greater 231 closed. By region, the number of developers registered in Gyeonggi fell by 58, followed by Busan with 14, Incheon with 12, North Jeolla with 11, and Seoul with 10.
Until 2022, the real estate development business was booming. The number of registered developers nationwide at the end of the year rose from 2,218 in 2017 to 2,715 in 2022. But the situation changed in 2023. Closures began to outpace new registrations. The number of registered developers turned to a decline, to 2,657 in 2023 and 2,408 in 2024, and by the end of last year it had fallen about 15.9% from three years earlier.
Behind this were rising interest rates that increased funding expense, higher construction costs, and continued unsold inventory in provincial areas. Financial institutions also tightened lending in the wake of the Legoland incident, and delays in permits and groundbreakings became widespread. Ultimately, DS Networks, regarded as one of Korea's three major developers, filed for court receivership at the end of September last year.
On top of this, with the Ministry of Land, Infrastructure and Transport and related ministries—the Ministry of Economy and Finance and the Financial Services Commission—jointly unveiling measures at the end of last year to improve the soundness regime for real estate project financing (PF), concern in the industry is growing. The core of the plan is to differentiate soundness regulation, provision accumulation, and lending limits based on a developer's equity ratio, and to gradually raise the equity ratio requirement to 20% within five years. This means that after 2030, when a developer pursues a new development project, it must secure 20% of the total project cost—not the land cost—as equity.
The Korea Developer Association said, "The phased implementation to mitigate market shock is positive," but emphasized, "Details such as criteria for valuing equity and large-exposure credit regulations need supplementation that reflects PF characteristics." Equity value changes as a project progresses, because financial firms recognize the land cost at the initial purchase price as equity. It said a supplemental measure is needed to reflect in equity valuation the increase in a project's land value at the time permits are obtained.
The association also argued that large-exposure credit regulations should reflect PF characteristics. Typically, a project operator establishes a separate corporation (PFV) for each project. This is to prevent impacts on individual projects even if the parent company collapses. However, it said if the government groups multiple PFVs of a particular operator together and applies lending regulations, there is a risk of effectively neutralizing the core PF principle of "separating the sponsor and the project."
An industry official said, "The new plan may help strengthen the soundness of the financial sector, but it could also have side effects that shrink the real estate development market, such as a credit crunch even at sound business sites," adding, "Development outside Seoul and neighboring areas could gradually become more difficult, so a reasonable set of supplements that gives some breathing room is needed."