As the government presses for faster housing supply, small-scale redevelopment projects run by Korea Land & Housing Corporation (LH) are gaining momentum on the strength of quicker permitting and a range of incentives. With demand rising, the government has moved to expand construction starts by subsidizing project costs, and LH has shifted to a system of continuously sourcing new sites. Large and mid-sized builders are also joining LH-led redevelopment and urban mixed-use development projects one after another, changing how the industry views public-sector redevelopment.
Task Force Hunts for Sites as Seoul Pipeline Nears 10,000 Units
LH has recently formed a task force to find new candidate sites for street-block redevelopment, the agency said on the 5th. The aim is to move away from a passive approach that relied on public calls for applications and instead directly identify areas where private-sector redevelopment has stalled. The task force is tasked with quickly handling feasibility reviews as well as consultations with residents and the collection of their consent.
"With the government pledging to expand housing supply in central Seoul, we need to secure as much new volume as possible," an LH official said. "To implement the policy quickly, we will continue a range of activities, including resident briefing sessions."
LH's main small-scale housing redevelopment programs are street-block redevelopment and Moa Town. Both are based on the Act on Special Cases Concerning Unoccupied House and Small-Scale Housing Improvement, which allows them to proceed more quickly and with simpler procedures than large-scale redevelopment or rebuilding. Street-block redevelopment improves one or two blocks surrounded by roads while preserving the existing road network. Moa Housing is a redevelopment model introduced by the Seoul Metropolitan Government in 2022 under Mayor Oh Se-hoon to improve low-rise residential areas where large-scale redevelopment is difficult, and a Moa Town is a cluster of several Moa Housing sites. LH agreed to cooperate on Moa Town projects in 2024. Some Moa Town districts are handled by Seoul Housing & Urban Development Corporation (SH).
As of the 5th, LH's small-scale housing redevelopment pipeline in Seoul totaled roughly 10,000 units, including 4,007 units across 18 street-block districts and 5,489 units across nine Moa Town districts with public participation. Street-block projects are under way in Seocho District's Bangbae 1 district (70 units) and Yangjae 1 district (45 units), Yangcheon District's Mok-dong 2 district (159 units) and Gwangjin District's Jayang 1 district (129 units). The Siheung 11 district in Geumcheon District (817 units), which received approval for its project implementation plan early this year, is large enough to add meaningful supply once construction begins in earnest.
Profitability Remains a Long-Standing Challenge, With More Incentives Under Review
LH is weighing additional incentives for small-scale redevelopment to speed up supply. Even now, unlike ordinary redevelopment and rebuilding, small-scale projects can skip steps such as drawing up a redevelopment plan and forming a preparatory committee for an association. Projects that allocate at least 20% of units to rental housing can have their floor area ratio eased to the legal ceiling and receive support for the cost of installing infrastructure such as roads and parks. In its Aug. 13 supply measures, the government pledged to begin construction on an additional 4,200 units by 2030 and to expand support, including easing the fee burden on associations.
Demand is rising, but the small size of these projects places clear limits on their profitability. Conflicts of interest among residents and disputes with builders over construction costs are also sources of instability. With few units available for general sale, returns are lower, and a considerable number of sites cannot absorb rising construction and financing costs. Even with incentives written into the system, the actual improvement can vary depending on location and project structure. Analysts point to the same factors behind the cancellation this year of association approvals for street-block projects that LH is not involved in, including sites around Sinwol-dong in Seoul's Yangcheon District and the Doksan low-rise housing complex in Geumcheon District.
Experts say small-scale redevelopment should be seen not as a substitute for large-scale projects but as a way to fill supply gaps. Lowering uncertainty through public-sector project management capacity and institutional support must go hand in hand with verifying feasibility, building resident consensus and expanding infrastructure if the projects are to translate into an actual increase in supply.
Integrated Review Cuts 16 Months; Builders Grow More Interested
LH is addressing the profitability issue through what it calls integrated development based on building agreements. Under this approach, small-scale redevelopment management zones are grouped together as if they were a single complex, the same builder is selected, and facilities such as underground parking are shared. Last month, the street-block redevelopment project in the Seoksu Station area of Geumcheon District became the first in the country to pass an integrated review, after its management plan and building plan were drawn up in parallel. Normally, reviews of the two plans proceed in sequence. The project covers three zones: the area around Cheonnok Villa in Siheung-dong (A1), the area around 972 Siheung-dong (A2) and the area around 973 and 974 Siheung-dong (A3). LH plans to carry out sales to association members this year, relocate residents and demolish structures next year, and break ground in 2028.
"The parallel drafting approach we proposed to the Seoul city government and the association shortened the project timeline by 16 months compared with the previous process," an LH official said. "Having confirmed that permitting periods can be shortened even in small-scale redevelopment, we will actively push to adopt this nationwide and speed up housing supply in city centers."
Builders have also turned more positive recently. Public-sector redevelopment projects receive floor area ratio incentives 1.2 to 1.4 times those of private projects and are not subject to the price cap on new homes, allowing general sales at market-level prices. Another advantage is freedom from the burden of permitting delays: the government and local governments have streamlined approval procedures, cutting project timelines by about two years compared with ordinary redevelopment. In private redevelopment and rebuilding, the builder must provide guarantees to the association, but public-sector projects carry a lighter financing burden.
"A lot of public redevelopment is happening in central Seoul, so it is also a good opportunity to promote our brand," an official at a major construction company said. "The funding burden is lighter than in private redevelopment, and shorter project timelines improve profitability, so builders will keep bidding for these contracts." An LH official said, "With public support, residents can lower their contribution payments and acquire a branded apartment, while builders can secure a project site in the city center at lower risk."
