President Byeon Chang-heum of Korea Land and Housing Corp. 2nd R, and President Kim Ki-myung of Global SeAH are joined by Construction Minister U Han Zaw, 2nd L, of Myanmar and other official after signing an MOU to set up a j.v. company at the Ministry of Construction in Yangon, Myanmar, on Aug. 7. (Photo: LH)

“The third-term new cities should be developed according to new plans, and it may be a good idea to include repurchase agreements as a condition to a sale of new homes, “ said President Byeon Chang-heum of Korea Land and Housing Corp.(LH).

He made the statement while meeting reporters in Sejong City for a briefing session on Aug. 22, adding “they should not just build apartments as they did in the past.”

He recalled that residential homes built in the first-term were designed for a family of four, but now they are building them for a family of 2.4 persons, which demonstrates changes in demographics when it comes to building new housing. He said plans for the next wave of development should be based on new ideas, as new issues connected to the housing and the cities may crop up.

LH has been considering attaching a repurchase agreement to the sale of a home in third-term new cities housing projects.

If that condition is difficult to be attached to all new units built, the condition could be attached by location and the timing of the sale in the new cities.

The LH CEO said if allocation prices of new homes comes to around 80 to 90 percent of market prices, they can be sold without conditions, but a repurchase condition should be attached to those homes whose prices fall short of market prices - coming to around 50 to 60 percent of the market value.

LH is currently engaged in the development of a basic plan for the next wave of new cities in cooperation with LH Land and Housing Research Institute and the LH New City Planning Team.

He said the ideas came from the New City Forum, a new think tank made up of experts trained by the Ministry of Land, Infrastructure and Transport, that says the concentration of houses in low cost areas in new cities may be good enough.

Residential houses in Paris have an average floor area ratio less than 250 percent, but the actual concentration ratio is higher than Korea’s high-rise apartments, with a floor area ratio of 300 percent, showing that the low floor area ratios can be boosted to the higher actual floor area ratios with effective measures.

Byeon also shared thoughts on remuneration payments for land to be bought in the new cities. Some 20 trillion won would be needed initially for reimbursements for land to build for the new cities. That will be boosted to as much as 40 trillion won after other factors are considered.

Fearing that the excessive costs for land remuneration could spur inflation and a rush for land-related investments around the country, a number of new ideas have been in development.

Those include the participation of the private sector by further boosting land remuneration payments and the creation of REITs to take charge of the planning for the new cities.

He also suggested the idea of a “Compact City” to solve the problems associated with increases in housing prices in Seoul, mostly in the Gangnam Area, by developing the land around railroad stations for residential houses.

LH announced on Aug. 7 that it has signed a memorandum of understanding (MOU) on establishing a joint venture to build an industrial complex with the Urban and Housing Development Department (UHDD) of Myanmar’s Ministry of Construction (MOC) and Global Sae-A Co. in Nay Pyi Taw, the capital of Myanmar.

The Korea-Myanmar Industrial Complex (KMIC) is the first industrial complex project promoted by LH in the ASEAN region. It will be built on an area of 2249,000 square meters in Nyaung Hnit Pin, about 10 kilometers north of Yangon city.

The project period will be divided into two stages from 2019 to 2024, and the total construction cost is 130 billion won ($107.45 million).