“Support for Smooth Funding of Aging Planned City Redevelopment Projects”
Selection of the first primary fund operator as the preferred negotiation partner by the end of the year
(Sejong=News1) Reporter Cho Yong-hoon = On the 29th, the Ministry of Land, Infrastructure and Transport announced that, in cooperation with the Housing and Urban Guarantee Corporation (HUG), they will formally push forward the creation of a Future City Fund worth 12 trillion won to support smooth funding for the redevelopment of aging planned cities.
They plan to announce the selection of the first primary fund operator for five days starting from the 30th of this month. The main bid will be announced from October 13 to November 23, and the preferred negotiation partner will be determined by the end of the year. The first primary fund worth 600 billion won will be established by March next year.
The Future City Fund is a policy fund aimed at the stable procurement of the substantial initial project and construction costs required for the redevelopment of aging planned cities. It focuses on securing interest income based on AAA grade HUG guarantees and attracting active private investment.
The primary fund will directly lend up to 20 billion won for initial project expenses and will also purchase part of the sub-fund’s income securities to serve as seed funding for capital raising. The Ministry of Land, Infrastructure and Transport expects that this will allow project implementers to stably secure funds and increase negotiating power for construction costs, thereby improving the actual business feasibility.
The selected operator will take on roles such as attracting investment centered on the first primary fund, establishing guidelines for sub-fund operations, and managing the entire fund. The selection criteria for the operator include total asset and real estate net asset size, operational staff and performance, financial mobilization capabilities as demonstrated by submitting Letters of Intent (LOI) and Letters of Commitment (LOC), understanding of policy, and cooperation plans with the Ministry of Land and Transport and HUG.
As many leading regions of the first-generation new town are rapidly advancing, such as submitting special redevelopment plans to local government advisory committees, there is an expected need for the first initial project loans during the first half of 2026.
An official from the Ministry of Land, Infrastructure and Transport stated, “With the launch of the primary fund in the first quarter of next year, initial project costs will be supplied in a timely manner,” adding that “we plan to continue administrative and financial support for the swift implementation of resident-proposed projects and the timely start of 63,000 planned housing units in aging planned cities by 2030.”
Terminology Explanation
■ Aging Planned City
Defined under the ‘Special Act on the Redevelopment and Support of Aging Planned Cities,’ it refers to areas, created for large-scale housing supply and urban development, that undergo land development projects, public housing projects, etc., determined by presidential decrees, and have been in existence for over 20 years with an area of 1 million square meters or more.