Seoul, South Korea – The South Korean Ministry of Land, Infrastructure and Transport (MOLIT) announced a comprehensive plan to revive the struggling private construction sector. The measures, outlined in the ministry's 2025 work plan, include establishing a permit support center, increasing public guarantees, and strengthening market monitoring.
To expedite the approval process for private housing projects, MOLIT will launch a "Real Estate Development Permit Support Center" in the first half of 2025. The center will streamline the permitting process, addressing delays caused by excessive local government regulations and inter-agency disputes. Additionally, the ministry will halve the period during which pre-sales are restricted for construction companies under business suspension orders.
"We've seen instances where local governments impose unnecessary requirements or where different agencies have conflicting opinions, leading to prolonged permitting processes," said a MOLIT official. "The new center will help resolve these issues promptly and reduce risks for developers."
To inject liquidity into the market, the government will provide an additional 30 trillion won in public guarantees through capital injections into the Housing & Urban Guarantee Corporation (HUG). Moreover, MOLIT, along with the Ministry of Economy and Finance and the Financial Services Commission, will establish a joint task force to monitor market prices and supply.
To address the challenges faced by the regional construction industry, the government will increase the mortgage guarantee limit for collateralized loan obligation (CLO) real estate investment trusts (REITs) that purchase unsold homes. Additionally, HUG will provide consulting services to simplify the approval process. For regions with a significant number of unsold completed homes, the Korea Land and Housing Corporation (LH) may consider purchasing these properties to convert them into rental housing.
Furthermore, to alleviate the burden on small and medium-sized construction companies, the government will reduce guarantee fees for regional construction projects by up to 20% until the end of the year.
These initiatives are aimed at boosting the construction industry, which has been facing challenges due to a sluggish economy and a decline in real estate prices. By streamlining regulations, providing financial support, and strengthening market monitoring, the government hopes to stabilize the market and stimulate economic growth.
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