The word ``redevelopment" is deeply embedded in discussions of real estate in Korea.
In the middle of 2011, there were 2,407 approved and proposed redevelopment districts in cities across Korea. Seoul alone had 610 districts. They are everywhere in older areas of Seoul and other major cities.
The process of redevelopment is complicated, but the result simple: apartment complexes replace old neighborhoods made of detached houses and small multifamily units. The process creates great stress in neighborhoods because the minority of residents who oppose redevelopment are forced to leave their homes.
Regardless of their stance on redevelopment, the vast majority of residents end up leaving the neighborhood because they cannot afford to buy one of the new apartments. Redevelopment thus results in a complete change in the makeup of the community.
Redevelopment emerged in the 2000s after the boom in apartment living in the 1990s. The satellite cities of Bundang and Ilsan opened in early 1990s as did other large apartment complexes in Seoul and other cities. Until the 1990s, detached houses were the norm, particularly outside of Seoul. Apartments in the 1980s were largely the preserve of the upper middle class, but they became the norm for the middle class in the 1990s. Apartments were profitable for builders and owners because prices kept going up. They were not only attractive as places to live, but also as investment vehicles.
With apartments the norm for living and investing, it was only natural for others to want in on the game. In the 2000s, residents in older neighborhoods, often with the support of construction companies, gathered to push redevelopment. The 2,407 redevelopment districts across the country are products of this effort. Compared to apartments, housing in older neighborhoods was inconvenient and less attractive financially.
Things began to change in 2008 with the financial crisis. The price of apartments fell slightly and recovery has been flat. An aging population is looking for smaller residences, but downward pressure is on large units. Some apartment complexes in suburban Seoul have many unsold units. The prolonged slump in real estate, then, has made apartments less attractive financially, which has slowed the push for redevelopment in many areas.
The problem, of course, is that areas that began the process of redevelopment in the early 2000s have aged yet more. As long as the prospect of redevelopment was alive, residents did little to maintain their houses and new construction permits were not issued. Areas of old, often substandard, housing were frozen, decaying only further. In many areas, residents are senior citizens who end up trapped in substandard housing that depends on redevelopment for its value.
Another problem is that many of the redevelopment districts are near central areas of the city. Some have historical value and unique characters. For romanticists, they are part of a disappearing history. For pragmatists, they are pockets of urban blight that have a negative influence on entire areas of the city. In the end, a large number of decaying redevelopment districts deprives Korean cities of life.
Recognizing the problem, the national government and city governments have begun taking action to reduce the number of redevelopment districts. Residents in areas where apartments are no longer profitable are gradually pulling away from redevelopment, hoping that their land will eventually be a greater asset than an apartment. In Seoul, Park Won-soon, the new mayor, is keen on developing a policy to improve living conditions in areas that have given up on redevelopment.
The scale of the problem may be too large for Seoul or any city to handle on its own. Of the 607 proposed redevelopment districts, 317 have been approved. The decay in housing in these redevelopment districts is most severe, and it is a systemic fault, not that of residents.
Areas where redevelopment districts were proposed but not approved will also need support because they, too, have decayed for the same reason. They will need support to repair the damage or, in many cases, build new houses. The national governments and city governments will have to take a hard look at existing laws that discourage detached houses and pedestrian–centered communities.
A sustained upturn in the market for apartments would, of course, change things. The glow would come back and sparkling new apartments would blight in redevelopment districts. The easiest and least expensive policy for the government is to try to reflate the real estate market in the hope that redevelopment districts take care of themselves.
Attractive as it may be, such a policy is unwise because it would reduce housing affordability and lead to a nasty real estate bubble. Instead, the government must face the problem of redevelopment districts head-on by helping stimulate a new paradigm in housing that offers hope for older areas of cities.
The writer is a professor at the Department of Korean Language Education at Seoul National University. He can be reached at email@example.com.