President Lee Jae-myung said at the National Economic Advisory Council plenary meeting on the 9th that the government should "consider imposing substantial holding burdens" on companies' non-business real estate. President Lee issued the directive, stating that "shifting capital toward productive sectors is an important government task." The government is expected to classify non-business property holdings as speculation and review strong regulatory measures including strengthening comprehensive real estate tax and property tax.
Corporate holdings of non-business real estate are indeed substantial. A comprehensive survey of 2,554 domestically listed companies conducted by The Seoul Economic Daily and Truston Asset Management found that combined "investment property" valuations reached approximately 107 trillion won. Under accounting standards, investment property refers to land and buildings owned solely for rental income or capital gains. Progressive civic groups have called for high-intensity regulations similar to those under the former Roh Tae-woo administration to curb such non-business property investment.
However, classifying all non-business real estate as speculative assets is debatable. Under tax law, non-business real estate is defined as property not directly used for "corporate operations" such as business purposes registered in corporate registries after a certain grace period following acquisition. The grace period ranges from two years to five years depending on use and industry. A manufacturer that purchases factory land or a real estate developer that acquires residential construction sites for sale could be classified as holding non-business property if the land is not used for its intended purpose within five years. Some cases may involve unavoidable delays in groundbreaking or completion due to industry downturns, rising construction costs, or funding difficulties. Imposing heavy taxes by broadly labeling such cases as speculation without considering individual business circumstances would burden companies and raise concerns about investment contraction in the medium to long term.
A careful approach is needed to ensure that non-business property policies do not lead to corporate investment contraction. Regulations should precisely target speculation while allowing breathing room for companies securing land for manufacturing, logistics, research infrastructure expansion, or housing and commercial facility supply. It is also important to first open exit routes so that excessive pressure to sell assets does not damage corporate value or trigger credit crunches. Non-business property regulations should focus on promoting productive investment, not squeezing corporations.
