[비즈한국] The Seoul Metropolitan Government has recently drawn attention by swiftly announcing a regulatory repeal plan aimed at boosting the economy and stabilizing the livelihoods of citizens. This policy, initiated under the leadership of Mayor Oh Se-hoon, embodies a determination to boldly eliminate regulations in the construction and development sectors, such as easing the non-residential usage ratio for mixed-use buildings and expanding exemptions for environmental impact assessments. Since then, the city has broadened the scope of its policy by announcing the easing of public contribution ratios and the simplification of administrative procedures. However, it remains questionable whether these policies can truly contribute to the revitalization of the Seoul real estate market and the improvement of citizens' quality of life.
Furthermore, amidst a proliferation of various real estate-related policies currently being pursued by the Seoul Metropolitan Government, there is considerable skepticism about whether this regulatory repeal plan can be properly implemented, given that almost none of the existing policies are producing tangible results.
Proliferating Urban Regeneration Projects - Drifting Policies
The Seoul Metropolitan Government is already simultaneously pushing for various urban regeneration and residential maintenance projects. Representative examples include the Rapid Integrated Planning, Moa Town, and Urban Regeneration New Deal projects. These projects each have different goals and directions, with some aiming to expand housing supply and others aiming to improve underdeveloped areas. However, most of these projects are drifting without producing concrete results.
For instance, while the Rapid Integrated Planning project was highly anticipated from its inception, its progress is extremely slow due to excessive administrative procedures and conflicts among residents during the planning stage. Similarly, Moa Town, which aims to reorganize densely populated detached housing areas and supply small-scale housing, is failing to achieve practical results due to a lack of cooperation between local governments and residents, as well as a lack of economic feasibility. The Urban Regeneration New Deal project, although expanded nationwide, is being criticized for setting excessive goals and for inefficient budget execution.
With projects already underway failing to show clear progress, questions are being raised about whether new deregulation measures can be properly executed. This is why criticism is emerging that policy priorities are unclear and that the focus is on increasing the sheer number of policies rather than on effective, site-oriented measures.
Effectiveness of Deregulation - Possibilities and Limitations
The regulatory repeal plan announced by the Seoul Metropolitan Government aims to increase economic vitality by revitalizing private development. However, this realistically comes with several limitations.
First, there is a disconnect between market conditions and deregulation.
Currently, the Seoul real estate market faces complex problems such as high interest rates, a trading freeze, and supply shortages. In such a situation, even if regulations are repealed, it is difficult to induce active participation from the private sector. For example, even if the mandatory ratio for commercial facilities in mixed-use buildings is eased, it would be difficult to expect actual effects given the decline in demand for commercial space.
Second, there is the problem of conflict between existing policies.
While deregulation aims to expand supply and promote development, it is highly likely to conflict with other real estate policies. For instance, land transaction permit zones limit transactions themselves, lowering market liquidity, while the price ceiling system for new apartment sales weakens the profitability of new projects. This contradictory direction between existing regulations and new relaxation measures can cause confusion in the market.
Third, there are limits to administrative capacity.
Currently, the Seoul Metropolitan Government is pursuing multiple policies simultaneously, such as the Rapid Integrated Planning and Moa Town. In such a multi-policy structure, vast administrative capacity and resources are required for additional deregulation policies to be implemented properly. Realistically, however, there are limits to how much the administrative infrastructure can support this.
Bold Deregulation: Is It Really the Most Necessary Policy?
The Seoul Metropolitan Government's regulatory repeal plan certainly has positive aspects. For example, simplifying environmental impact assessment procedures can reduce project delays and provide potential for increasing investment incentives. In addition, easing public contribution ratios can enhance the economic viability of maintenance projects and promote housing supply.
However, it is unclear how effective these policies will be in resolving the major problems currently facing the market.
There are issues that need to be addressed before repealing regulations. For example, the price ceiling system for new apartment sales is pointed out as a major cause for shrinking supply by undermining the profitability of development projects. If regulations are repealed without addressing this issue, the goal of revitalizing development will be difficult to achieve.
Furthermore, restoring the trust of market participants should be a priority. Even if the Seoul Metropolitan Government continues to announce new policies, if existing projects show no progress, the credibility of the city's policies will inevitably decline.
Resetting Direction - Contemplating the Essence of Deregulation
The Seoul Metropolitan Government needs to consider the effectiveness and market suitability of its policies, going beyond simply repealing or easing regulations. It must clearly set priorities and promote policies that can actually work in the field.
To do this, improving existing policies must come first.
The projects that have been promoted, such as the Rapid Integrated Planning and Moa Town, are not achieving proper results. Before introducing new regulations, the problems of existing policies must be analyzed and improvement measures prepared.
Ensuring integration and consistency between policies is also important.
It is necessary to secure integration and consistency between policies so that deregulation and existing regulations do not conflict with each other. To this end, cooperation with various stakeholders should be strengthened, and a site-oriented approach should be introduced.
Restoring market trust must also proceed simultaneously.
Market participants' trust can only be restored by maintaining transparency and consistency throughout the policy announcement and implementation process. This is more important for promoting long-term market stability than for short-term achievements.
Ultimately, caution is required regarding ineffective regulatory repeal.
The Seoul Metropolitan Government's regulatory repeal plan could have positive effects in the short term by boosting private vitality and promoting housing supply. However, in a situation where already proliferated policies are failing to show proper progress, a cautious approach is necessary for additional deregulation to be effective.
For the Seoul Metropolitan Government to achieve true results, it needs an approach that faces the current market problems squarely and addresses the most urgent regulations and policies first. Regulatory repeal itself is a means, not an end. Systematic preparation and execution must follow to ensure that those means work correctly.
Kim Hak-ryul, head of the Smart Tube Real Estate Research Institute, known by his pen name "Pasyong," previously served as a team leader at the Real Estate Research Division of Gallup Korea. He operates and hosts the Naver blog "Pasyong’s World Exploration" and the YouTube channel "StuTV." His books include "The Power of Gyeonggi-do Real Estate (2024)," "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)," "Future Map of South Korean Real Estate (2021)," "From Now On, Only Places That Will Rise, Rise (2020)," and "User Manual for South Korean Real Estate (2020)."