Peri-urban rent gap and land value capture by government-led urban development in South Korea

Abstract

This research investigates a South Korean land value capture experience in peri-urban development. With the growing demand for urban land, rent gaps grew. A South Korean public development scheme, the Housing Site Development Promotion Act (HSDPA), enabled a public development agency to financialize and recoup the rent gaps by allowing for land acquisition at agricultural value. Hence, these peri-urban projects were self-funded in providing infrastructure at “no cost” to the government. A case study – of Yongin-Jukjeon on the periphery of Seoul – reveals that the rent gap between pre-development and post-development was over fivefold, and the public development agency achieved an internal rate of return of 262 per cent after paying for decent-quality infrastructure facilities by the national standard. Despite the size of this return, the rent gap was also shared among and reallocated to other key actors including original landowners, construction companies and end-users.