Korea Land & Housing Corporation (LH) has offered extraordinary conditions to sell unsold multi-unit housing land. If construction companies pay just 10% of the contract amount, they can acquire the land without intermediate payments and through interest-free installments. The balance can be paid with the sale price after the apartment construction begins.
LH provides these incentives because construction companies, which had mobilized affiliates to engage in 'swarms bidding' to purchase public land in the past, are now passive about acquiring public land. With the downturn in the real estate market, even some construction companies are returning public land. The decline in demand for public land among construction companies means a decrease in the supply of dwellings. LH aims to activate housing supply by offering 28,000 units of public land this year and intends to expand housing supply through these supports for private construction companies.
According to the construction industry on the 10th, LH announced new supply plans for unsold multi-unit housing land to the construction sector last month. According to this plan, construction companies can acquire multi-unit housing land by paying just 10% of the contract amount. Interest-free installments are also available.
The remaining balance can be paid in a lump sum on the agreed date, which can be deferred for up to 3 years and 6 months. Construction companies can pay the land balance with the sale price after starting the apartment construction. If a construction company pays the balance in advance with its own funds, it can receive a discount benefit of up to 5%.
These benefits apply to unsold multi-unit housing land that can be used within the year. Currently, the targeted areas include ▲8 plots in Incheon Yeongjong ▲4 plots in Hwaseong Dongtan 2 ▲1 plot in Yangju Go-eup ▲2 plots in Goesan Mini ▲2 plots in Gyeongsan Daem ▲1 plot in Miryang Bubuk ▲1 plot in Changwon Gapho.
LH plans to offer purchasing guarantees for the multi-unit housing land it sells if construction companies meet the purchasing guarantee requirements set by new real estate policies, enabling them to start apartment construction quickly. Additionally, if a construction company that secures land does not begin construction within 3 years and 6 months or defaults on the payment, the contract will be canceled. This promotional plan will apply for two months until June.
LH is promoting the sale of unsold land in this manner to expand housing supply. The goal is to reduce financial burdens from the land purchase stage for construction companies to facilitate housing supply. An LH official noted, "This is a measure prepared to increase the supply of housing units in a situation of shortage," adding that, "The unsold multi-unit housing land promotion plan is expected to be implemented for two months, with a possibility of extension based on market conditions."
LH has set a goal to supply more than 190,000 public dwellings and 28,000 units of public land this year. This plan was announced amid ongoing concerns about housing supply instability due to soaring construction costs and project financing (PF) issues. However, if construction companies do not proceed to acquire public land, this plan to expand housing supply will face challenges.
Construction companies' reluctance to purchase public land stems from concerns over profitability. Just 5 to 6 years ago, during a real estate boom, construction companies competed fiercely, mobilizing affiliates to participate in bids for public land. At that time, they were guaranteed sales, ensuring stable revenue. However, as the real estate market has contracted, unsold properties have increased along with steep rises in construction costs, causing construction companies to hesitate in acquiring public land. For public land, pricing caps also imposed have rendered the business unprofitable.
Some construction companies have even returned previously acquired multi-unit housing land. Kumho Engineering & Construction gave up multi-unit housing land in Incheon Geomdan P1 that it purchased in 2021, while Dongbu Corporation abandoned the residential-commercial complex project land in Yeongjong Sky City in July last year. There were 25 cases where contracts were canceled after acquiring public land last year, amounting to 2.7052 trillion won.