LH, HUG Launch First Financial Support for Public Housing Projects with Private-Sector Participation; Guarantee 152.8 Billion Won for Pyeongtaek Godeok

[Financial News] Financial support for public housing projects involving private-sector participation from Korea Land and Housing Corporation (LH) and Korea Housing & Urban Guarantee Corporation (HUG) has been applied for the first time. A consortium led by Kumho Engineering & Construction Co., Ltd. received approval for a guarantee limit of 152.8 billion won and secured its first loan of 21.9 billion won at an annual interest rate of around 4.7%.
According to LH and HUG on the 2nd, the Pyeongtaek Godeok A-63 district signed a financial guarantee agreement on the 27th of last month and drew down the first installment of its loan on the 28th. The project will supply 630 public housing units, with Kumho Engineering & Construction Co., Ltd., Umi Construction, Shin Dong-A Construction and Shinheung D&C participating in the consortium.
Private-sector-participation projects are a model in which LH and private developers jointly supply public housing. Because private developers handle construction and housing supply and directly raise project funds, high interest rates have been a factor driving up financing costs and discouraging participation.
The two agencies developed the financial support program after gathering feedback from private developers and consulting with relevant agencies, beginning in February last year. Since July this year, HUG has been guaranteeing up to 90% of total project costs and applying a flat annual guarantee fee rate of 0.324% to for-sale housing in LH's contract-based private-sector-participation projects. The actual loans cover amounts raised by private developers to make up for shortfalls in sales revenue.
LH and HUG expect this support to reduce private developers' financing costs and help ensure stable project implementation.
Further support is also planned. Preparations are under way to sign financial guarantee agreements for projects including a total of 540 homes in the Miryang Bubuk A-1 and S-2 blocks, and document submission and review procedures are to be streamlined.
Park Hyeon-geun, head of LH's Public Housing Division, said, “We will continue to work closely together to quickly supply high-quality homes that the public wants.”
Choi Jong-won, head of HUG's Fund Projects Division, said, “The significance of this first support is that HUG's guarantee has reduced private developers' financing costs and supported stable funding,” adding, “We will continue to ease on-the-ground financing difficulties and provide financial support for public housing supply.”
A Kumho Engineering & Construction Co., Ltd. official said, “With prolonged high interest rates and a tight PF market increasing private construction companies' financing burdens, LH and HUG's support has eased funding pressure and helped us secure stable liquidity, allowing us to move the project forward more quickly.”

[email protected] Choi Ga-young Reporter