Minister Kim Yoon-duk: "Agrees on Need for Construction Finance Support... Concerned About Raising Floor Area Ratios for Private Redevelopment"

Private Developers Cite PF and Bridge Loan Market Tightening
Minister Kim: "Recognizes Need for Financial Support"
Expresses Concern Over Bill to Raise Floor Area Ratio for Private Redevelopment Projects

Kim Yoon-duk, Minister of Land, Infrastructure and Transport, responded to the claim that financial and tax support for private housing suppliers must be expanded in order to increase housing supply. He said, "I fully agree with this view," and added that the ministry will continue discussions with financial authorities. However, regarding housing supply through the deregulation of private redevelopment projects, he drew a clear line, expressing concern that the demolition of existing homes could drive up housing prices.

At the Real Estate Policy National Debate held on the 27th at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul, Minister Kim addressed the arguments made by speakers that financial and tax support are needed for housing suppliers. He said, "The Ministry of Land, Infrastructure and Transport is fully aware of the challenges regarding supplier financing, and this is always under consideration. However, when it comes to improving financing systems for suppliers, we are concerned about possible side effects and are continuously consulting with the Financial Services Commission."

Prime Minister Han Seong-sook, Deputy Prime Minister and Minister of Economy and Finance Koo Yoon-cheol, and Minister of Land, Infrastructure and Transport Kim Yoon-duk are answering questions from attendees at the Real Estate Policy National Debate held on the 27th at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul. Photo by Yoon Dong-joo

During the debate, it was pointed out that many viable projects are facing fundraising difficulties as the bridge loan and project financing (PF) markets remain tight. Therefore, calls were made for selective financial support to private housing businesses. Moon Gil-joo, Chairman of Daeshin E&D, noted, "For private housing suppliers, securing a bridge loan is critical, but currently, the process is stalled. Even if land acquisition is completed, it is usually impossible to move on to the main PF loan. There needs to be a financial structure that allows bridge loans and PF to proceed smoothly," he emphasized.

Minister Kim also rejected the criticism that the government is passive towards private-sector supply, clarifying that this perception is inaccurate. He stated, "There have been suggestions that the government is too focused only on public sector projects. However, the ministry has a clear position regarding robust support for the acceleration of permits or approvals, the establishment of authorization support centers, and the bold innovation and supply of diverse housing types such as knowledge industry centers and urban residential housing on the private side as well."

Nonetheless, regarding supply through the support of private redevelopment projects, he stood firm. "On the opinion that we should increase the floor area ratio for private sector projects, the ministry takes a cautious stance," he said, adding, "During the process of redevelopment, when houses are torn down, there is the effect of demolition, and there are significant concerns that this could contribute to rising real estate prices."

He also addressed the recent proposal to amend the Urban Renewal Act, which would expand the application of the legal maximum floor area ratio—currently applied only to public redevelopment projects at 1.3 times—to private redevelopment projects as well. He noted, "I have raised concerns at the National Assembly several times regarding the potential rise in housing prices due to housing demolition, and I have asked that this issue be discussed during the legislative process."

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