[비즈한국] On September 29, the Ministry of Land, Infrastructure and Transport announced the results of the call for applications for "pilot districts" for the redevelopment of first-generation new towns, based on the Special Act on the Improvement of Old Planned Cities. A total of 99 proposals covering 153,000 households were submitted, showing significant interest—about 5.9 times the initially planned selection scale of 26,000 households (up to 39,000).
Notably, Bundang received proposals for 59,000 households across 47 districts, recording a competition rate 7.4 times higher than its selection target of 8,000 households (up to 12,000), drawing significant attention.
While this announcement is seen as a meaningful first step toward the redevelopment of first-generation new towns, the skewed results toward specific areas like Bundang raise concerns about future regional imbalances and provide important implications for investor choices.
In this column, I will summarize how other regions should respond to Bundang's advantageous position and what decisions investors should make.
Bundang New Town is the area that has received the most attention among all first-generation new towns. In this open call, 47 districts in Bundang submitted proposals, with an impressively high average resident consent rate of 90.7%.
Behind this lies the area's excellent residential preference and infrastructure. From its initial planning stages, Bundang has maintained high residential preference due to its proximity to Gangnam, Seoul, and the development of transportation and commercial infrastructure. Even today, it is considered an attractive region for both younger and middle-aged generations.
Furthermore, Bundang residents show a strong willingness to participate in redevelopment projects. Residents are anticipating both improved living conditions and increased asset value through rapid redevelopment, which is reflected in the high consent rate. Consequently, Bundang is currently considered the area most likely to be selected.
However, other regions—specifically Ilsan, Pyeongchon, Jungdong, and Sanbon—are at a relative disadvantage compared to Bundang. Ilsan submitted proposals for 22 districts, and its average consent rate of 84.3%, while not poor, is lower than Bundang's. Pyeongchon, Jungdong, and Sanbon also recorded consent rates of 86.4%, 80.9%, and 77.6%, respectively.
These regions are evaluated as having less competitiveness than Bundang in terms of living environment and infrastructure. In particular, Sanbon has relatively less developed transportation networks, and its residential preference is lower compared to Bundang or Ilsan.
So, what efforts should these regions make in the process of pilot district designation and future reconstruction?
First, they must expand resident participation. The resident consent rate is a critical factor determining the success or failure of a redevelopment project. Each region needs to encourage participation like Bundang did and actively communicate the necessity of the project. Specifically, they must emphasize that rapid redevelopment provides not only improved living environments but also the benefit of increased asset value.
Second, they need to develop specialized strategies for each region. A differentiated strategy, distinct from Bundang's, is required. For instance, Ilsan could leverage its strengths as an ecological city alongside the expansion of metropolitan transport networks. Meanwhile, for Jungdong or Sanbon, strategies targeting younger generations and newlyweds by improving local education and cultural infrastructure could be effective.
Third, they must strengthen cooperation with local governments. Local governments should play a key role in gathering resident opinions and formulating public contribution plans. Active administrative support is necessary, such as adopting measures to support rapid planning by appointing trusts or LH (Korea Land and Housing Corporation) as early project implementers.
What decisions should investors make regarding these first-generation new towns?
Investors need to carefully examine the results of this first-generation new town redevelopment call. While redevelopment projects offer opportunities for asset value appreciation, risk management is equally important. Several key factors for investors to consider are as follows:
First, analyze the investment environment by region. While Bundang is clearly the most advantageous area, competition is likely to be fierce. Conversely, regions like Ilsan or Pyeongchon may have lower entry barriers, potentially requiring smaller initial investments while offering high returns once redevelopment is completed. Investment should be based on a comprehensive consideration of residential preference, infrastructure development potential, and the speed of the redevelopment project in each area.
Second, invest with a long-term perspective. First-generation new town redevelopment is a long-term project. It is important to approach it from a mid-to-long-term perspective rather than expecting quick returns. In particular, investors should forecast the completion points for living environment improvements and infrastructure expansion and select areas with high potential for long-term asset value growth.
Third, focus on risk management and diversified investment. There is no guarantee that every region will be successfully redeveloped. Therefore, risk management is vital; instead of concentrating investments in one area, a strategy of diversifying across several regions—like Bundang, Ilsan, and Pyeongchon—can be more effective. Investors must also build a portfolio flexible enough to respond to changes in government policy or economic conditions.
The first-generation new town redevelopment project is an important undertaking that goes beyond mere improvement of living environments to redefine the functions of the city. For the redevelopment project centered on Bundang to achieve visible results, resident participation and active support from local governments are essential, and balanced development across regions must be promoted.
Investors, too, must make strategic judgments and maintain a long-term perspective amidst these changes.
How the first-generation new town redevelopment unfolds will likely cause major shifts in the South Korean real estate market. Therefore, anyone interested in real estate should pay close attention to these processes, even if they are not directly participating in an investment. BizHankook’s "Real Estate Insight" column will continue to provide periodic analysis.
Kim Hak-ryul, better known by his pen name "Pasyong" and head of the Smart Tube Real Estate Research Institute, previously served as the team leader of the Real Estate Research Division at Korea Gallup. He runs the Naver blog "Pasyong’s World Exploration" and the YouTube channel "Stube TV." He is the author of books such as "The Absolute Principles of Seoul Real Estate (2023)," "The Future of Incheon Real Estate (2022)," "Kim Hak-ryul’s Absolute Principles of Real Estate Investment (2022)," "The Future Map of South Korean Real Estate (2021)," "From Now On, Only Areas That Will Rise Will Rise (2020)," and "The South Korean Real Estate User Manual (2020)."