With the government pressing for faster housing supply, small-scale redevelopment projects run by Korea Land & Housing Corporation (LH) — a central player in the supply push — are drawing attention for their quicker permitting and range of incentives. As demand for small-scale redevelopment has grown, the government has moved to expand construction starts by subsidizing project costs, and LH has shifted to a system of identifying sites on a rolling basis. The agency plans to roll out further incentives and streamlined procedures to address the weak financial viability that has long dogged small-scale housing redevelopment.
LH said on the 5th that it recently formed a task force to identify new candidate sites for street-block housing redevelopment projects. The aim is to move away from a passive approach centered on public calls for applications and instead directly and continuously identify areas where private-sector redevelopment has stalled. Beyond assessing project viability, the task force is tasked with moving quickly to consult residents and secure their consent. "With the government committed to expanding housing supply in central Seoul, we need to secure as much new volume as possible," an LH official said. "To carry out government policy swiftly, we will continue a range of activities including resident briefings."
LH's main small-scale housing redevelopment programs are street-block redevelopment and Moa Town. Both are based on the Act on Special Cases Concerning Unoccupied House and Small-Scale Housing Improvement, and their advantage lies in simpler procedures that allow faster progress than large-scale redevelopment or rebuilding. Street-block redevelopment involves improving one or two blocks surrounded by roads while preserving the existing road network. Moa Housing is a redevelopment model introduced by the Seoul Metropolitan Government in 2022 — associated with Mayor Oh Se-hoon — to improve low-rise residential areas where large-scale redevelopment is difficult, and a Moa Town is a cluster of several Moa Housing sites. LH agreed to cooperate on Moa Town projects in 2024. Some Moa Town districts are handled by Seoul Housing & Urban Development Corporation (SH) rather than LH.
As of the same day, LH's small-scale housing redevelopment pipeline in the Seoul area totals roughly 10,000 homes — 4,007 units across 18 street-block redevelopment districts and 5,489 units across nine Moa Town districts with public participation. Street-block projects are under way at multiple locations, including Bangbae District 1 (70 units) and Yangjae District 1 (45 units) in Seocho-gu, Mok-dong District 2 (159 units) in Yangcheon-gu and Jayang District 1 (129 units) in Gwangjin-gu. Sihheung District 11 (817 units) in Geumcheon-gu, which received approval for its project implementation plan earlier this year, is large enough that it should translate into a meaningful supply of homes once construction begins in earnest.
LH is also weighing additional incentives for small-scale redevelopment to accelerate housing supply. Projects in small-scale redevelopment areas can already skip steps such as drawing up a redevelopment plan and forming a preparatory committee for an association, which are required for conventional redevelopment and rebuilding. In addition, when rental housing accounts for 20% or more of the units, the floor area ratio is eased to the legal ceiling and costs for installing infrastructure such as roads and parks are subsidized. In the Aug. 13 supply package, the government pledged to begin construction on an additional 4,200 homes by 2030 and promised expanded support, including lower fee burdens for associations.
While demand for small-scale redevelopment is rising, the small size of the projects clearly limits their financial viability. As with private redevelopment, conflicts of interest among residents and disputes with contractors over construction costs are cited as sources of uncertainty. The number of units available for general sale tends to be small, which weighs on profitability, and a considerable number of sites cannot absorb rising construction and financing costs. Even with the incentives written into the system, the actual improvement in viability can vary depending on location and project structure. Those factors are cited as the reason that association approvals were revoked this year for street-block redevelopment projects in the Sinwol-dong area of Yangcheon-gu and at Doksan low-rise multi-unit housing in Geumcheon-gu, neither of which involved LH.
Experts advise viewing small-scale redevelopment less as a substitute for large-scale projects than as a means of filling gaps in supply. Public-sector project management capacity and institutional support can reduce uncertainty in carrying out projects, they say, but an actual expansion of supply requires that viability checks, resident consensus and infrastructure expansion proceed in parallel.
Responding to concerns about viability, LH has put forward an "integrated development through building agreements" approach, under which small-scale redevelopment management zones select a single contractor and share facilities such as underground parking as if they were one complex. Last month, the street-block redevelopment project in the Seoksu Station area of Geumcheon-gu became the first in the country to clear an integrated review after drawing up its management plan and building plan in parallel. Normally, reviews of the management plan and the building plan proceed one after the other. The site consists of three zones: the Cheonnok Villa area in Siheung-dong (A1), the area around 972 Siheung-dong (A2) and the area around 973 and 974 Siheung-dong (A3). With the review cleared, LH plans to sell units to association members this year, carry out relocation and demolition next year and break ground in 2028.
"The parallel planning approach we proposed to the Seoul city government and the association cut the project timeline by 16 months compared with the previous process," an LH official said. "Having confirmed that permitting periods can be shortened even in small-scale redevelopment, we will actively push to introduce this nationwide and speed up housing supply in urban centers."
