"Seven Years of 'It's Coming'... Negative Premiums Surge in Regional Innovation Cities [Real Estate AtoZ]"

Despite Announcement of Second Round of Public Institution Relocations, Real Estate Market Remains Quiet

Median Real Estate Price in Naju Innovation City Rises by 70 Million Won Over 10 Years

"Schools and Hospitals Come First"... Institutions Prioritize Residential Conditions

How Far Do the Innovation City Act Provisions Go? Funding Allocation Remains an Issue

With the conclusion of the June 3 local elections, attention is now focused on whether the government's second round of public institution relocations to regional areas will accelerate. Minister of Land, Infrastructure and Transport Kim Yoon-deok previously stated, "We will finalize the institutions and regions subject to relocation in the first half of this year, and begin the relocation process next year." However, despite the competition among local governments to attract institutions, the local real estate market remains largely in a wait-and-see mode.

Yulgok-dong, Gyeongbuk Innovation City area, Gimcheon-si, Gyeongbuk Province. Ministry of Land, Infrastructure and Transport

On June 4, the head of a real estate agency near the Gwangju·Jeonnam Innovation City in Naju, Jeollanam-do, commented, "There isn't a trend of outsiders inquiring about buying apartments based solely on expectations of public institution relocations." He added, "During the initial phase of the first relocation, more than 90% of the planned commercial properties were built, but since the planned population wasn't reached, many commercial units remain vacant." He further noted, "Even if additional institutions come, the local economy and housing prices will only move if employees and their families actually move in and live here and contribute to local consumption." The Gwangju·Jeonnam Innovation City is the largest among the 10 existing innovation cities. Both the first-round number of relocated employees (7,871 people) and the planned multi-family housing units (17,920 units) rank first nationwide. However, according to the satisfaction survey on living conditions conducted by the Ministry of Land, Infrastructure and Transport, it ranks lowest in the country. Before attracting additional institutions, improving the lacking residential environment remains an urgent task.

Similar sentiments prevail in other regions as well, with many doubting whether the government will actually proceed with the relocation. A real estate agency representative in the Gyeongbuk Innovation City in Gimcheon-si, Gyeongbuk Province, said, "This has been talked about for seven to eight years, so people are skeptical," adding, "The real estate market is also quiet." The head of an agency near Gangwon Innovation City in Wonju, Gangwon Province, stated, "With a large supply of new housing, negative premiums are common, and since commuter buses still run, the city is empty on weekends," and remarked, "People will only believe it when they see construction actually begin."

A representative from a real estate agency in Chungbuk Innovation City, Jincheon-gun, Chungbuk Province, also commented, "There has been no impact at all, and everyone thinks it's just a campaign pledge for the June 3 elections," adding, "People will only believe it once they see actual construction starting." Over the past 10 years, Chungbuk Innovation City has focused on improving residential conditions by opening educational facilities from kindergarten through high school, and recently opening the National Fire Service Hospital, operated under the commission of Seoul National University Hospital. Despite these efforts, the family relocation rate stood at just 50.5% as of the end of last year, the lowest among all innovation cities nationwide.

Officials in charge of attracting institutions in local governments report that when they meet with potential relocating organizations, they hear many requests regarding residential conditions such as education, healthcare, and transportation for employees and their families. An official from a metropolitan government responsible for public institution attraction stated, "We are dividing target institutions by strategic industry, with each relevant department making direct visits," and "We are gathering feedback on the support measures and suggestions that institutions desire for relocation."

This official further explained, "When meeting with institutions, the first thing they ask about is educational infrastructure, such as autonomous private high schools or special-purpose high schools for their children," and added, "With shuttle buses to Seoul being discontinued, there were also many requests to increase intercity and express bus routes."

Another local government official said, "Considering transportation convenience, there was a strong preference for the Chungcheong region, which is closer to the Seoul metropolitan area." In this context, labor unions at some of the institutions subject to relocation have reportedly insisted that the Daejeon and Chungcheong regions are practically their last acceptable options.

With the local elections over, it is expected that the newly elected heads of local governments will make attracting public institutions their top priority as soon as their transition committees are launched, increasing pressure on the central government. However, negotiations over allocation criteria remain before the actual relocation can proceed. The current Innovation City Act stipulates that public institutions should relocate to innovation cities as a general principle, but allows for individual relocations outside these areas if local characteristics and institutional special circumstances are recognized. In the 22nd National Assembly, several bills have already been proposed to expand the scope of relocation targets beyond the existing innovation cities, with some aiming to prioritize regions experiencing population decline or to reflect fairness for non-innovation or underdeveloped areas.

Funding is another variable. During the first round, institutions bore more than 90% of the relocation costs themselves, with government subsidies accounting for only about 8%. In the second round, a key issue will be how much the government will fund improvements in residential conditions and incentives. President Lee Jaemyung reiterated his principle of providing greater incentives the farther the relocation is from the capital region, both at the Central-Local Cooperation Meeting last November and again in February this year. His intention is to maximize the effect of balanced regional development by sending institutions as far as possible from the capital area.

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