Navigating the Downturn: LH’s Strategic Shift

Faced with a sluggish economy and a challenging real estate market, the Korea Land and Housing Corporation (LH) is proactively deploying a range of “promotion strategies” to stimulate the sale of its assets. These strategies include incentivizing brokers and potential tenants through pre-sale commissions and placement incentives, aiming to revitalize interest in unsold properties.

Pre-Sale Incentives: A Closer Look

LH is implementing a “pre-sale attractive” system, particularly for shopping malls and housing units that have struggled to find buyers. This system offers cash payments to licensed real estate brokers and even current tenants who successfully refer new buyers to LH properties. This approach is designed to leverage local networks and word-of-mouth marketing to boost sales.

Gwangju Jeonnam Pilot Program

the LH Gwangju Jeonnam Regional Headquarters is spearheading this initiative with a pre-sale program targeting unsold commercial units in the 2 A-1 and 3BL newlywed Hope Town complexes in Gwangju-dong, Gwangsan-gu. Under this program, eligible participants—including licensed brokerage agencies, national LH housing contractors, property owners, and residents—can earn ₩2.8 million (approximately $2,100 USD) per unit for successful referrals.

Addressing unsold Inventory: A Case study

The pre-sale incentive program follows previous attempts by LH to sell these properties. As an example, in December of the previous year, nine commercial units in the Gwangju Sunwoon 2 A-1 and A-3 blocks were offered for sale at ₩351.2 million and ₩255.37 million respectively,but failed to attract buyers.A subsequent announcement in January also did not yield the desired results, leading LH to adopt this more aggressive promotional approach.

Placement Incentives for Land Sales

Beyond residential and commercial properties,LH is also actively addressing challenges in land sales. The construction industry, grappling with funding constraints due to the economic downturn and project financing (PF) market uncertainties, has shown reluctance in land bidding. To counter this,LH is implementing “placement incentives” for unsold land parcels.

How Placement Incentives Work

Placement incentives function as a commission-based system. When land is sold through a licensed broker’s agency,the broker receives a payment based on a predetermined commission rate. This acts as an “introduction fee,” encouraging brokers to actively market and sell LH’s land holdings.

Current projects utilizing placement incentives include:

• Dongducheon Industrial Complex Industrial Facility Sites (A1 ~ A13)
• Paju Unjeong 3, Unjeong Parking Lot, and Paju bridge Neighborhood Living Facility
• Jeju Regional Headquarters (Cheonma Ranch, Coastal Ranch)

The specific incentive amounts are resolute by LH’s “Land Incentive Care Fee by Land Land Incentive Funds.” Such as, the Dongducheon Industrial Complex Industrial Facility Site offers 0.9% of the contract amount (including VAT) as an incentive. The Cheonma Ranch and coastal Ranch incentives are set at ₩30 million each.

Expert Insight: the Broader Economic Context

The current economic climate significantly impacts the real estate market. According to recent data from the Ministry of Land, Infrastructure and Transport, construction investment has decreased by 5.2% year-on-year, reflecting the challenges faced by developers in securing funding and initiating new projects.LH’s proactive measures are therefore crucial in mitigating the impact of these economic headwinds.

We have introduced a pre-sale childhood and placement incentive system to promote the sale of land and assets owned by the Corporation. We are able to implement a system of autonomous pre-sale and placement incentives in accordance with the conditions and extensive reviews of each region.
An official of LH

looking Ahead: LH’s Commitment to Economic Recovery

By implementing these innovative incentive programs,LH aims to stimulate economic activity,reduce its unsold inventory,and support the construction industry during this challenging period. The success of these initiatives will be closely monitored as LH continues to adapt its strategies to the evolving economic landscape.