Gov’t spending on land to reach six-year high
Government spending on land for public projects like housing developments and free economic zones will likely reach a six-year high of 16 trillion won ($15 billion) next year, according to estimates from a Korean research firm Monday, largely driven by projects that were delayed earlier this year after the impeachment of President Park Geun-hye.
According to the firm Gzone, 92 development projects will break ground next year, and the firm expects compensation for land owners to reach 14.9 trillion won. When adding 1.5 trillion won spending on infrastructure projects, government compensation is expected to reach 16 trillion won, the highest since 2012, when it totaled 17 trillion won.
Gzone estimates the total area of compensation will be 73.5 square kilometers (28.4 square miles), equivalent to eight times the size of Yeouido in western Seoul.
Nearly half of the compensation for land owners, about 7.4 trillion won, will go toward the development of 53 industrial complexes. Another 2.3 trillion won will go toward seven public housing projects and 1.8 trillion won on 11 urban development projects.
“This year, various public development projects were pushed back to next year due to the impeachment of President Park Geun-hye,” said Shin Tae-soo, chief executive of Gzone. “That’s why next year’s overall compensation is expected to see a significant increase.”
Gzone had initially expected the government to spend 19 trillion won this year on land compensation but readjusted its estimates after major projects under the Park administration, including public housing projects like New Stay apartments, were postponed following her removal from office in March on corruption charges.
The new administration under President Moon Jae-in, which began in May, plans to continue the projects. Most of the compensation will be concentrated in the Seoul metropolitan area, with about 8.8 trillion won spent on development projects in the area. Among the spending is 1.4 trillion won compensation to build an industrial complex in Pyeongtaek, Gyeonggi. The government expects to start issuing the payments in April.
Other major projects in the Seoul area include a public housing development in Goyang, Gyeonggi, by the state-owned construction company LH, in which the government expects to issue compensation in June, as well as a housing project in Suseo-dong, southern Seoul, where the government will begin compensating for land in September.
In other areas of the country, the government expects to spend 4 trillion won on land in 25 projects including public housing in Ulsan and an airport in Sacheon, South Gyeongsang.
Land compensation in Gangwon will likely see a steep drop after facility investments for the 2018 PyeongChang Winter Olympics end.
Gzone expects landowners to invest the compensation into the real estate market.
BY LEE HO-JEONG [email@example.com]