Project converted to full PF after 2024 fund injection

FSC deputy chief hears proposals from managers of new 3 trillion won fund

Financial Services Commission Vice Chairman Kwon Dae-young. [Herald DB]
Financial Services Commission Vice Chairman Kwon Dae-young. [Herald DB]

Financial Services Commission Vice Chairman Kwon Dae-young visited a residential project financing site in Seoul's Mapo-gu that resumed construction after receiving support from the Korea Asset Management Corporation's PF normalization fund, inspecting progress and hearing proposals from the financial and construction sectors.

Kwon visited the project financing site in Dohwa-dong, Mapo-gu on Thursday, then held a meeting with officials from the Financial Supervisory Service, the Korea Asset Management Corporation (Kamco), existing Kamco fund managers — including Shinhan Asset Management, IGIS Asset Management, Capstone Asset Management, Koramco Asset Management and KB Asset Management — as well as contractors and developers. The visit followed FSC Chairman Lee Eok-won's inspection of a normally operating PF site on Sept. 10, with Kwon this time turning his attention to a project that had been restructured after facing distress and subsequently resumed construction.

The site acquired its land in 2020 and completed permitting in 2022, but a combination of instability in the PF market, a slowdown in the real estate sector and rising construction costs prevented it from converting to full project financing. After a Kamco fund managed by Shinhan Asset Management was deployed in May 2024, the project was restructured by acquiring existing bonds and securing the land and development rights.

To improve viability, the original urban residential unit plan was changed to small- and mid-sized apartments and a new contractor was selected. The Kamco fund invested a total of 60.5 billion won ($44.2 million), of which 27.5 billion won came from Kamco's own capital. The restructuring normalized a project worth around 300 billion won; construction broke ground in February this year and pre-sales were completed in April. The 178-unit development achieved a 100 percent pre-sale rate and is scheduled for completion in December 2028.

"The significance of the site visited today lies in the fact that, even after construction had halted, the Kamco fund fundamentally improved the project's viability — through changes in land use and contractor — creating conditions for private capital to flow in," Kwon said.

The investment performance of the existing Kamco fund was also disclosed. The fund, established in September 2023 with 1.1 trillion won, has disbursed 819.3 billion won to date. Of that amount, 373 billion won has been directed to residential project sites, with approximately 3,881 housing and quasi-housing units expected to be supplied.

A construction site. [Herald DB]
A construction site. [Herald DB]

Kamco President Jeong Jeong-hun said the corporation would swiftly establish a new 3 trillion won fund by the first half of next year in line with the government's Aug. 13 measures, pledging to provide firm support for housing supply and the vitality of the construction and financial ecosystem.

Fund managers called for regulatory improvements to allow the new fund to be deployed more smoothly at project sites. Lee Seok-won, chief executive of Shinhan Asset Management, said policy support — including incentives to attract private capital — was needed. Cho Gap-ju, chief executive of IGIS Asset Management, requested greater flexibility in investment targets and conditions to better reflect the circumstances of individual project sites.

Koramco Asset Management CEO Yun Jang-ho also asked that fund capital be deployable through a variety of methods, including equity investment and lending. Capstone Asset Management CEO Kim Yun-gu said it was necessary to accelerate capital deployment through cooperation with related agencies, including the Korea Housing Finance Corporation, the Korea Housing and Urban Guarantee Corporation and the Korea Land and Housing Corporation.

Financial authorities have designated 325 PF project sites in the greater Seoul area for close monitoring, assigning a dedicated manager to each site and tracking progress. Sites in distress or facing temporary liquidity difficulties will be linked to financial support tools such as the Kamco fund to facilitate normalization.

"I hope the private financial sector will come to view the normalization of distressed project sites not merely as a matter of improving asset quality, but as a new investment opportunity to enhance project viability and generate returns," Kwon said. "I urge the financial sector to ensure a reliable supply of capital for housing, so that we can overcome the housing shortage our society faces."

Meanwhile, FSC Chairman Lee Eok-won visited a PF site in the transit-oriented area near Pungmu Station in Gimpo, Gyeonggi Province on Sept. 10, reviewing a case of financing secured through Korea Housing Finance Corporation PF guarantees. At the time, Lee called on the corporation to actively extend guarantees and urged private financial institutions to supply capital so that funds needed at viable project sites could be provided in a timely manner.


rim@heraldcorp.com