[Weekend Money] 60,000 New Homes Planned for Seoul Metropolitan Area, but Groundbreaking Timeline Unclear... When Will Construction Stocks Benefit?

The government has announced a plan to supply 60,000 housing units in the Seoul metropolitan area, equivalent to the size of a new city, but the outlook among construction stocks remains cautious. Despite the significant volume, opinions in the securities market are divided regarding the timing of groundbreaking and the feasibility of the plan.

Gwanggyo Apartment Complex

On the 29th, the government unveiled its "Urban Housing Supply Expansion and Acceleration Plan," which concentrates on supplying 32,000 units in Seoul and 28,000 units in Gyeonggi Province. Key development sites include Yongsan International Business District (10,000 units), Gwacheon Racecourse (9,800 units), and Taereung Country Club (6,800 units). Most groundbreaking is scheduled between 2028 and 2030. The locations and supply volume themselves are considered favorable.

Lee Kyungja, a researcher at Samsung Securities, assessed, "By promoting housing supply in areas where infrastructure is already established, it will be possible to meet real demand." She added, "Urban development momentum is also expected, including housing supply, and the potential for commercializing idle sites, which could not be developed due to tax and financing burdens despite their prime locations, is likely to increase."

Most groundbreaking scheduled for 2028-2030... Limited impact on the housing market

Kim Yoonduk, Minister of Land, Infrastructure and Transport, is holding a joint briefing on housing supply promotion at the Government Seoul Office in Jongno-gu, Seoul, on the 29th.

However, it is expected to take considerable time before the plan has a direct effect on the housing market.

Shin Daehyun, a researcher at Kiwoom Securities, commented, "With most groundbreaking concentrated between 2028 and 2030, it will be difficult to expect a rapid increase in the number of units breaking ground in the short term." He also pointed out, "It is disappointing that the plan does not include deregulation of private sector supply."

He explained, "In the case of Seoul, over the past ten years, more than 90% of housing supply has been provided by the private sector, with a significant portion coming from urban renewal projects such as reconstruction and redevelopment." Regarding large-scale sites such as Yongsan International Business District, Camp Kim, and Taereung Country Club, he diagnosed, "These projects are currently facing difficulties due to ongoing conflicts with the Seoul Metropolitan Government or continued opposition from residents."

Shin added, "During the Moon Jae-in administration, many projects were abandoned due to difficulties in utilizing idle sites and creating new residential land, so it is unlikely that all the sites proposed by the current government will lead to groundbreaking."

 The key investment point is 'timing'... Construction stocks will reflect results only after groundbreaking begins in earnest

The area around Camp Kim and other former U.S. military sites in Yongsan-gu, Seoul

The securities industry advised caution regarding investments based on this supply policy. In the short term, attention should be paid to beneficiaries of rising real estate prices due to supply shortages, while in the medium term, asset stocks related to urban development are worth considering.

Shin noted, "From the perspective of construction company stocks, it is important to focus on the recent spread of real estate price increases. If the upward trend continues outside the major areas of the metropolitan region, it is highly likely to lead to an increase in private sector groundbreaking by major construction firms." In other words, construction stocks are expected to reflect improved performance only after groundbreaking begins in earnest from 2028 onward.

Samsung Securities highlighted asset stocks. Lee pointed out, "A large-scale housing supply in the Yongsan area is expected to increase the floating population and lead to improvements in nearby infrastructure," naming Seobu T&D, which will break ground on the Yongsan Najin Shopping Center development project, as a related stock.

HDC Hyundai Development Company was also mentioned as a strong candidate. Lee cited the full-scale progress of major development projects such as Bokjeong Station area, Gongneung Station area, and Yongsan Railway Hospital site, as well as proprietary projects like Seoul One I-Park and Cheongjugagyeong. The target price was set at 28,000 won, 31% higher than the closing price on the 29th (21,350 won).

Real estate price increases likely to continue for the time being

There are also forecasts that the upward trend in real estate prices will continue for the time being.

Park Youngdo, a researcher at Daol Investment & Securities, stated, "Supply and demand are not the only factors determining prices," but also diagnosed, "Currently, anxiety over supply instability is having a significant impact on real estate price movements." He added, "Even if various measures are considered from the consumer's perspective in the housing market, if the volume does not feel sufficient, it will be difficult to calm anxiety."

Shin also judged, "A simple expansion of public sector-led supply has limitations in providing a clear signal of increased groundbreaking in the supply market, where the private sector has historically driven growth, and it also increases the financial burden on LH." He predicted that ongoing regulations on multiple homeowners and regulated areas are reducing the number of properties available in key locations, and that record-high prices will continue to be reported even amid low transaction volumes.

This content was produced with the assistance of AI translation services.