[Focus] Problems with MCT report on satellite cities

Critics have described as haphazard the large-scale housing construction plan for satellite cities and suburban areas that the Ministry of Construction and Transportation (MCT) has been pursuing since last year.

On December 29, MCT unveiled the Hwasung satellite city independent development plan, which calls for the construction of 40,000 housing units on a 2.7 million pyong tract of land (one pyong is 3.3 square meters). More than 120,000 people would live on the site.

The MCT held discussions with the ruling Millennium Democratic Party (MDP) on the development of the Pankyo and Hwasung satellite cities last September. However, the MDP opposed the plan, saying it would further concentrate the population in the metropolitan area.

The final decision on the plan was pushed back to this year. The MCT announced the Hwasung independent development plan early this week.

Many real estate experts forecast that if Pankyo and Hwasung are not developed together, selling apartment lots will be difficult. Another argument that has been made is that unless sufficient profits are realized for the construction of roads, the traffic situation would only worsen.

Last Wednesday, the MCT announced that mini satellite cities would be constructed in Paju and Taejon and that a total of 2.36 million pyong of land would be designated as expected land development areas. In the metropolitan area, 17.2 million pyong for the construction of more than 490,000 homes has already been set aside. This year, 400,000 pyong of land will be additionally designated as land development areas.

Hence, there are concerns that the oversupply of land for development would further deteriorate the real estate market.

Another plan to establish satellite cities on 22.66 million pyong in six regional cities including Chonan, Taejon and Mokpo was announced on Thursday. As expected, due to the depressed economies in regional cities such as Pusan and Mokpo, housing demand is low and hence the development effect on these regions is deemed to be minimal. Regional governments made accusations of regionalism with regard to the announcement last October of plan to develop three new satellite cities. The number of cities earmarked for development was subsequently increased to six.

The majority of real estate experts are concerned that the plans are not so much intended to build homes as to provide construction companies with work. As of November, there were around 53,800 unsold homes nationwide.

Ha Sung-kyu, professor for regional development at Chung-Ang University, said, ¡°Considering that there are still plenty of unsold homes in the Suji and Yongin areas, the housing demand that will be created by the Hwasung satellite city is questionable.¡± He added, ¡°In some regional cities, a serious problem may arise when many of these newly constructed homes go sold.¡±