Release of Two Billion Dollars Worries Experts

Next year, the government will pay up to 2 billion dollars to the citizens whose assets are to be taken under government-led development plans. Thus, experts worry that the huge chunk of money will shake the markets, including the real estate industry.

According to a joint report released yesterday by the Ministry of Construction and Transportation and Korea National Housing Corporation, the government plans to officially approve various development projects by the end of June next year. Thus, compensation will begin to be paid by the start of July.

In addition, it is highly likely that the Pyeongtaek, Yangju and Songpa new town projects will be approved this year. Then, the money will be paid early next year.

The total amount of the compensation will reach over 1.8 billion dollars. Specifically, 600 million dollars are to be allocated for Second Dongtan Development Project, 500 million for Geomdan Project, 330 million for New Paju Project, 300 million for New Pyeongtaek Project and 120 million for Hoicheon Project.

The authorities have not yet disclosed how much money is needed for the construction of New Songpa City. Experts, however, estimate that more than 150 million dollars will be required. Thus, the grand total will snowball to more than 2 billion dollars.

The Roh administration has “released” an astronomical amount of money in the name of compensation for these public undertakings. Since 2003, it has paid about 8.8 billion dollars. Considering the new projects, the sum will be more than 10 billion dollars.

Faced with concerns and criticisms from the public, the administration is now considering the “barter compensation” approach. Under the approach, an individual may receive compensation in the form of developed lots or apartment units.

bae2150@donga.com