This at a moment when the real estate market got a bit sounder, many empty apartments created by new town bubbles eventually finding tenants. And what to say of the recent easing of DTI (Debt To Income) and LTV (Loan To Value) ratios as household debt keeps skyrocketing (over 8% last year)...
But this is less about supply and demand rationale than about giving work to construction conglomerates, and a boost to voters' morale. I don't have the details of the 30% of the 2,400 regulations that shall be dumped by 2017, but social welfare is unlikely to gain ground to short term profits. Typically, the proportion of apartments reserved for rentals in any given block will be reduced, and there will be fewer constraints on unit sizes. LH Corporation's key assets will be sold to private developers, who really seem to be the ones calling the shots here.
Not very P.C. for an administration supposed to fight speculation and defend the interest of the weakest citizens. Interestingly, the very day the set of measures were announced, Seoul Mayor Park Won-soon met with Deputy PM Choi Kyung-hwan, a first meeting at such level since 2006, to discuss collaboration on infrastructures, including facilities along Hangang riverside, and a second cable car on Namsan*.
The best measure in the package is the end of what I call the 'greenfield new towns' (see "Wet eyes for wetlands and urban mirages"): instead of improving existing neighborhoods, authorities prefer to create artificial cities ex nihilo and extra muros because land is cheaper. Now hopefully, Korea shall significantly reduce the risk of urban nonsenses.
The most anticipated measure is the reduction of minimum age requirements by up to ten years for the reconstruction of apartment buildings, which means that the bed towns erected around the Olympics in the late eighties shall be replaced much earlier.
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| Korea to cut construction regulations: no more satellite New Town, but apartment redevelopment accelerated / Urbanism deregulation means that apartment blocks in Sanggye, Mokdong or Jamsil will be redeveloped much sooner - twitter.com/theseoulvillage/status/506611541722935296 |
Among the 1987 projects that could be up for reconstruction in 2017: Sanggye-dong (Jugong 3 blocks), Gaepo-dong (Useong 3 blocks), Mok-dong (5 blocks), or Apgujeong-dong (Hyundai 3 blocks). I wouldn't be surprised if the upscale Apgujeong moved first, and made the most of these tailor-suited gifts. Nowon seems also ripe, and there's a shortage of big apartments in this former bed town gone middle class. Some apartment blocks will grow taller and more exclusive, others will struggle to find investors.
What bugs me most is what will happen to the rest of Seoul. This remains a non-zero sum where even winners in the short term can lose in the long run. Giving free reins to private developers could help speculation return to LEE Myung-bak-era levels, and torpedo the nascent efforts to develop a more consistent and sustainable urban planning.
The risks are well known, and the cases of urban failures across Seoul already well documented. This is the last opportunity to apply a sustainable vision for urbanism in Seoul, and certainly not the moment to let anyone do anything anywhere.
Good or bad, the years that come will define Seoul's cityscape for good, and local authorities cannot wash their hands of the future of the capital and its citizens.
Seoul Village 2014
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* e.g. Korea JoongAng Daily 20140902: "Apartments to be rebuilt sooner" and "Deputy prime minister, mayor talk cooperation"
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