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(Yonhap Feature) S. Koreans suffer from broken dreams of 'new towns'
By Shim Sun-ah
SEOUL, May 4 (Yonhap) -- Park Yong-ho, 73, built a small three-story brick house in western Seoul in 1990 and had since been living there happily with his wife on 1.3 million won (US$1,203) a month earned from renting out space in the building.

   But his life began to unravel when the nationwide fervor for the government-initiated "new towns" housing redevelopment swept through his residency a few years ago.

   Like many other fellow residents, Park gave his full support to the government's proposal to develop his rundown working-class neighborhood into a posh apartment complex named "Gajaewul."

View of a residential district torn down for redevelopment in Namgajwa-dong, western Seoul. Construction of new apartments has been suspended for years due to legal disputes over the "new town" redevelopment project. (Yonhap file photo)

Things did not go the way he and other residents had hoped.

   "I belatedly learned that I have to pay more than the government-appraised value of my old house to get a new one," Park said with a deep sigh. "I have no place to resettle with little amount of compensation in hand, and my source of monthly income is gone."

   Park said he can't afford the new house with a total floor space of 112 square meters, because he does not have the additional 100 million won (US$92,549) needed to own it.

   The problem is owing to the current redevelopment system in which the value of land or housing is usually set at a level significantly lower than prevailing market prices. Land or homeowners are paid prices appraised by construction firms chosen to rebuild their homes when they give up their right to their real estate.

   Under the present system, homeowners are notified of the appraised value of their old houses and the prices of the new houses only in the final stage of the redevelopment process.

   Park and other residents were forced to relocate to cheaper places after their houses were demolished for redevelopment in 2008. But for all the trouble, the redevelopment of Park's old town has been put on hold due to a series of lawsuits filed by residents opposing it.

   Once called gooses laying golden eggs, the government's new town projects are now on the brink of collapse.

Protesters rally in front of the Seoul City Hall against new town redevelopment projects under way in the capital area. (Yonhap file photo)

The new town fervor started in 2002 as a pet project of then Seoul Mayor Lee Myung-bak, now the nation's president, along with the restoration of Cheonggye stream running through the heart of the capital. It quickly caught on in adjacent regions, boosted by pork-barrel politics. About 82 districts covering 80 million square meters across the country have been designated to be new towns, with more than half of them in Seoul and its surrounding Gyeonggi Province.

   During the 2008 parliamentary elections, homeowners blindly supported candidates who pledged to turn their electoral districts into new towns and make them wealthier. Home prices soared.

   In January 2009, six people, including a police officer, were killed in a blaze during a police raid on a dilapidated four-story building in Yongsan, central Seoul, to break up squatters who were holed up in the structure to protest redevelopment of the area. The incident drew nationwide attention as an example of the controversial new town projects gone bad, but the projects continued on, that is until recently.

Seoul Mayor Oh Se-hoon speaks during a news conference to announce the metropolitan government's plan to change housing redevelopment and reconstruction policies in a way to better keep features of respective neighborhoods. (Yonhap file photo)

In March, some 140 residents in Uijeongbu, a city just north of Seoul, occupied the lobby of City Hall for three days, demanding an overhaul of a plan to transform their residential area into a new town.

   They argued that the development project will end up kicking out residents who cannot pay the high prices of new apartments. Given the protracted slump in the housing market, they argued, many of the new apartments will not be sold.

   Similar protests followed in other areas as the projects stalled amid the 2008 global financial crisis. About 85 percent of the designated new towns in Seoul have yet to see the start of construction.

   The supply of cheap government-built apartments, "Bogeumjari," to low-income people is cited as another reason behind the waning popularity of the new towns.

   Market analysts say that the government should be partly held responsible for instigating property speculation by designating new towns in a short period without fully considering possible side-effects.

   "The present dilemma was caused by irresponsible promises by politicians and some greedy local residents wanting to make big money through land price hikes," said Park Won-gap of Speedbank, a leading local real estate portal.

   "The authorities need to conduct a strict review of the new town zones and decide which ones should be kept going and which ones not," he said.

   Residents in the designated new towns are the losers either way. Whether the project continues or is dropped, they will be left counting their losses unless the housing market picks up quickly and massively.

   Bowing to mounting protests, Gyeonggi Governor Kim Moon-soo decided on April 13 to scale down the new town project, a virtual acknowledgement of the project's failure four years after it was announced.

   He said he would not designate additional "new towns" and withdraw previously made designations if a majority of residents are against it.

   The following day, Seoul Mayor Oh Se-hoon, who chose to inherit his predecessor's new town project, said he would rather keep the project intact, because any cancellations or withdrawals would trigger confusion.

   Oh, however, said there will be changes in the way the new town projects will be pushed. He said he will put more emphasis on preservation and upkeep of project zones instead of building new apartments.
Like Gov. Kim, the mayor declared that there will be no more designations of new towns.