The government plans to create a new fund worth 3 trillion won to normalize troubled real estate project financing (PF) sites. The initiative aims to enhance housing supply by revitalizing PF projects that have stalled due to financial difficulties despite their viability.
On September 17, Kwon Dae-young, Vice Chairman of the Financial Services Commission, visited an apartment construction site in Dohwa-dong, Mapo-gu, Seoul, to assess the operation of the 'KAMCO PF Project Normalization Support Fund' and announce plans for the new fund.
The Korea Asset Management Corporation (KAMCO) will begin recruiting fund managers in October, with the selection process concluding in December. The goal is to establish the 3 trillion won fund by the first half of next year, with both public and private sectors contributing 1.5 trillion won each.
Notably, 60% of the new fund will be invested in residential projects, aiming to supply approximately 18,000 housing units. The Financial Services Commission intends not only to liquidate troubled PF projects but also to enhance their viability through restructuring, ultimately linking it to increased housing supply.
The existing KAMCO fund was established in September 2023 with a size of 1.1 trillion won and has so far invested 819.3 billion won. Of this, 373 billion won has been allocated to residential projects, which are expected to provide around 3,881 housing units.
A representative example is the project site in Mapo-gu visited by Vice Chairman Kwon. This site failed to transition to a main PF due to rising interest rates and construction costs. However, after KAMCO invested 60.5 billion won, the project was restructured to convert urban living housing into apartments and select a new construction company. Construction began in February, and sales were completed in April, with 178 units set to be supplied.
* This article has been translated by AI.
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