The Korean government is pushing to convert vacant commercial spaces, offices, and lodging facilities in urban areas into rental housing. The plan focuses on locations with strong accessibility, such as areas near transit stations in the Seoul metropolitan area, to boost housing supply.
The Ministry of Land, Infrastructure and Transport (MOLIT) and Korea Land and Housing Corporation (LH) announced Wednesday they will launch a "non-residential remodeling purchased rental housing" program. The initiative will convert vacant commercial, office, and lodging facilities in urban centers into quasi-residential units such as officetels and dormitories for use as public rental housing.
Starting with an initial procurement notice for 2,000 units, the government plans to expand rolling purchases. The program will focus on prime locations within regulated areas of Seoul and Gyeonggi Province. Two procurement methods will run simultaneously: direct purchase by LH and purchase agreements with private developers.
Under the direct purchase model, LH will first acquire well-located non-residential buildings in urban areas, then convert and remodel them into residential use for public rental housing. This approach allows LH to secure buildings in prime locations early. The purchase agreement model, set to be announced in early next month, involves LH signing contracts with private developers who carry out the remodeling themselves before LH purchases the completed buildings.
Eligible properties include neighborhood living facilities (Category 1 and 2), office buildings, and lodging facilities in key areas where housing supply is urgently needed. Priority will be given to locations with convenient public transit access, such as station areas. While whole-building purchases are the standard, floor-by-floor acquisitions are also possible when residential conversion is feasible.
To ensure fairness, quantitative criteria will be introduced to the purchase review process. A price ceiling has been set so that purchase prices do not exceed appraised values based on nearby market rates assessed before the change of use.
MOLIT will also pursue regulatory reforms to expand the program. The ministry plans to amend the Special Act on Public Housing Enforcement Decree to allow LH to purchase knowledge industry centers — which face worsening vacancy problems — and convert them to residential use. Currently, only office-use buildings within knowledge industry centers are eligible for purchase, but the amendment will extend eligibility to factory-use buildings as well.
The program will also introduce mid-sized unit types for newlywed couples and families with newborns, expanding beyond the previous focus on single-person households.
MOLIT has prior experience with similar conversions. In 2020, when urban hotels struggled due to a sharp drop in Chinese tourists following the THAAD dispute and the COVID-19 pandemic, the ministry converted hotels into single-occupancy public rental units for young adults. The current non-residential remodeling program aims to begin construction next year with move-ins targeted for 2028.
"In cities like New York, converting non-residential buildings to residential use has been common since the 1990s," said Lee Ki-bong, Director General for Housing Welfare Policy at MOLIT. "We will swiftly convert idle non-residential properties in urban areas into rental housing to help stabilize housing for young adults and newlywed couples."
