Seoul's urban redevelopment projects have delivered limited housing supply while fueling home price increases and widening wealth disparities, a civic group said.
The Citizens' Coalition for Economic Justice (CCEJ) held a press conference at its auditorium in Jongno-gu, Seoul, at 10:30 a.m. Friday, releasing an analysis of Seoul's redevelopment projects from 2012 through last year.
According to CCEJ, the actual increase in housing supply through Seoul's redevelopment projects during this period amounted to only about 53,000 units. While 312,493 new units were built, 259,028 existing units were demolished, leaving a net increase of just 17.1% of the total new construction. On an annualized basis, that translates to 3,819 units supplied per year.
CCEJ said the supply effect was also limited when compared to Seoul's total housing completions. During the same period, Seoul's total completions averaged 66,399 units per year, but the net supply from redevelopment projects accounted for only 5.8% of total completions.
The group pointed to widening wealth gaps following redevelopment. In the case of Sanggye Jugong Complex 8 and the nearby Sanggye Jugong Complex 9 in Nowon-gu, Seoul, the price difference was less than 100 million won before redevelopment but widened to about 300 million won afterward. In Seocho-gu, Seoul, the price gap between Nokwon Hanshin Apartment and the nearby Donga Apartment also expanded to about 2.2 billion won after redevelopment.
The group also criticized Seoul's policy of easing floor area ratios. CCEJ said the Seoul Metropolitan Government temporarily relaxed the floor area ratio for Class 2 general residential areas from 200% to 250% and for Class 3 general residential areas from 250% to 300% for three years starting in May last year to improve redevelopment project feasibility. The group argued that while the actual supply effect has been limited, the policy has only boosted profitability for private redevelopment projects.
"Redevelopment projects are more likely to drive up property prices and widen wealth disparities than to expand supply," CCEJ said. "Seoul mayoral candidates should reconsider their pledges to promote redevelopment from scratch." The group added, "Seoul must transparently disclose information on redevelopment projects and strengthen its system for recouping development gains."
