As Seoul faces a significant housing shortage, it has been revealed that none of the public redevelopment projects proposed by the government have actually begun construction. Despite the introduction of this initiative six years ago to expedite stagnant redevelopment efforts, the designation of candidate sites has not translated into actual construction or occupancy.
According to a report from Zigbang on July 8, the number of apartments scheduled for move-in in Seoul this year is projected to be 16,412, a 48% decrease compared to the previous year. Of this total, 87% are tied to redevelopment and reconstruction projects. With most of the anticipated apartment supply relying on these redevelopment efforts, the failure of public redevelopment to progress to construction could exacerbate future housing shortages and instability in the rental market.
The public redevelopment initiative was introduced with the aim of quickly revitalizing aging urban areas, involving the Korea Land and Housing Corporation (LH) and the Seoul Housing and Communities Corporation (SH) as implementing agencies. The program promised various incentives, such as increased floor area ratios, exemptions from price caps, integrated reviews, and project financing, with the goal of reducing the typical 10-year redevelopment timeline to around five years.
However, the results have fallen short of expectations. According to the Seoul City redevelopment project database, none of the 35 selected public redevelopment sites have commenced construction. Furthermore, there are currently no sites that have reached the management approval stage, and only three have received project approval: Sinseol 1, Yangpyeong 13, and Geoyeong Saemaul.
The bottleneck is evident not just at the construction stage but also in the preceding phases. Among the 35 public redevelopment sites, 14 remain stuck at the stage of establishing resident associations. In the public implementation model, the formation of resident representative councils and the designation of LH and SH as implementing agencies occur simultaneously, but many areas have failed to progress to project approval. This highlights the challenge that simply designating candidate sites and appointing implementing agencies does not guarantee actual supply.
The first pilot projects, selected in 2021, have also struggled to gain momentum. More than five years have passed since their selection, yet none have begun construction. The fastest among them, the Sinseol 1 area, is expected to receive project approval in 2025, with construction slated to start in 2027 and completion aimed for 2029. According to government plans, this year should have marked a point where move-ins were becoming visible, but the reality is that projects remain stalled before construction.
The government maintains that public redevelopment is not significantly slower than private redevelopment. They argue that both processes require considerable time from the decision of redevelopment plans to project approval. However, critics assert that since public redevelopment has been promoted as a supply solution, it should be evaluated based on the actual conversion rate to construction rather than the number of candidate sites.
Factors contributing to the stagnation include issues with consent and project viability. While public redevelopment has lowered the entry threshold for candidate sites with low initial consent rates, if opposition rates exceed a certain level, it can lead to project reassessment or cancellation, jeopardizing project stability. The Geumho 23 area, for instance, was removed from public redevelopment due to opposition rates exceeding 30%, transitioning to a private rapid integration planning model.
Additionally, rising construction costs, labor expenses, and financing costs in recent years have added to the burden. Coupled with additional requirements for public contributions, donations, and securing public interest, the viability of public redevelopment projects is further compromised. Even with public agencies involved, if the burden on residents does not decrease and project viability is not assured, maintaining resident consent becomes challenging. The presence of public agencies does not automatically resolve conflicts or viability issues.
Public reconstruction efforts are also facing limitations in expansion. While some areas among the five leading projects have progressed to project approval or redevelopment planning stages, none have yet begun construction. Profitable reconstruction sites tend to favor private methods, while public reconstruction often involves structural limitations, such as road penetration, excessive floor area ratios, and long-term disputes, making self-initiated efforts difficult.
Ultimately, the issue with public redevelopment lies not in a lack of candidate site discovery but rather in the failure to transition to construction. Even with public participation in redevelopment projects that could not be resolved through private methods, if issues related to consent, project viability, resident contributions, and construction costs remain unaddressed, actual supply will be difficult to achieve.
Yang Ji-young, a specialist at Shinhan Premier Pathfinder, stated, “The conversion rate to actual construction is more important than the designation of candidate sites. Without securing project viability, it will be difficult for public agencies to accelerate the process.”
* This article has been translated by AI.
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