President Kim Sun-deok of the Korea Housing and Urban Guarantee Corp.

Korea Housing and Urban Guarantee Corp. (HUG) will focus on the reconstruction of cities through its National City Housing Fund, which mainly funds the construction of rental houses in cities and housing welfare projects. It will be used to finance the revival of cities and other related projects to burnish the downtown areas of the respective cities

With the use of the fund getting more diverse, the company changed its name and is no longer the Korea Housing Guarantee Corp. The fund now finances projects for the revival of cities to improve residential conditions, not only the construction of residential houses in cities across the country. The company can also make direct investments in xsprojects, in addition to providing loans and issuing guarantees.

Another major change is that HUG will take control of how the fund is managed, not leaving it to the designated banks. HUG can also attract civilian cash, unlike before the change when the government was the only source of financing.

The fund has grown to 115 trillion won, which can be used to finance various projects to revive dilapidated areas of the cities around the country.

The change in the company’s operation has been the result of cities deteriorating rapidly, worsening the quality of residents’ lives. Low-birth rates and rapid aging have been growing with the housing supply rate rising to 103 percent across the country. Some 67 percent of the 3,479 regional basic autonomous organizations have been dilapidated, showing that simply building new residential houses was not an appropriate answer to the problems in the cities.

The urban problems are getting worse year by year. The government included urban revival in its Three-Year Plan, which announced last year. 

The government set up the Special Committee for Urban Revival under the Prime Minister’s Office.

Last May, 13 districts in large cities such as Seoul, Busan, Cheonan and Daegu were picked as the areas that needed revival plans, including Jong-ro, Changsin-dong, Sungin-dong, in Seoul.

Earlier this year, the government publicly selected districts around the cities — 35 in all — that need revival projects for 2016 out of the areas named by the people who answered the government’s public selection ads.

The Hug projects will spend some 1.2 trillion won on those selected districts to restore them by 2017, with each district getting from 6 billion won to 25 billion won to finance various projects to restore their dilapidated areas. 

President Kim Sun-deok said the company should be the main player in the revival of cities and the urban areas across the country, which will provide jobs to residents and also regional communities. He is the first CEO of HUG, which was newly launched this year and is ready to take on the urban renewal projects tailor-made for each district in the cities for improvement of its residential conditions.

HUG named five from the academic community as consultants to the project and so far five meetings were held with them on the urban renewal projects, which was followed by a meeting of the Urban Residential Housing Financial Conference in August led by First Vice Minister Kim Kyung-hwan of the Ministry of Land, Infrastructure and Transport in search of the most useful ways to use the fund.

HUG also has kicked off its urban renewal projects in Cheonan, South Chungcheong Province and Cheongju, North Chungcheong Province and the fund will be used from next year for various projects to renew the cities as it has to be approved by the National Assembly before the year is out.

An ad for HUG explaining its major functions such as urban and cities redevelopment projects.(Photos:HUG)