A Study on the Improvement of the Project Implementer System in Urban Renewal Projects: Focusing on the REITs Implementer Provisions of the Special Act on the Improvement and Support of Aged Planned Cities

Abstract

Purpose. Under the Act on the Improvement of Urban Areas and Residential Environments (hereinafter the “Urban Renewal Act”), redevelopment and reconstruction projects are, as a rule, implemented by an association of landowners. This association-centred structure has long been criticised for its limited capacity to raise funds, its lack of in-house expertise, and the high decision-making costs generated by heterogeneous stakeholders. Taking as its point of departure the fact that the Special Act on the Improvement and Support of Aged Planned Cities (in force 27 April 2024) and the Act on Support for Urban Core Complex Development (in force 7 February 2025) have successively admitted real estate investment companies (REITs) as project implementers, this study examines whether, and on what normative conditions, the REITs implementer scheme may be extended to ordinary urban renewal projects. Methods. Three methods are combined: (i) a comparison, at the level of statutory provisions, of the fund-raising structures legally available to associations and to REITs; (ii) a literal, systematic and teleological interpretation of the relevant provisions of the Urban Renewal Act, the Real Estate Investment Company Act, and the two special acts; and (iii) a comparative analysis of the implementer provisions of the special acts and of the general Urban Renewal Act. All statutes are examined as of 30 April 2026. Results. First, the difference between the two implementer types is one of structure rather than scale. An association forms its equity only in the later stages of a project, has no statutory basis or ceiling for debt financing, and relies in practice on the credit of the construction contractor. A REITs, by contrast, must maintain a statutory minimum capital, may borrow and issue bonds up to twice its equity capital—or borrow up to ten times its equity capital upon a special resolution of the general meeting of shareholders under Article 29(2) of the Real Estate Investment Company Act—and bears its own credit. Second, the normative structure of the REITs implementer provisions of the Special Act on Aged Planned Cities consists of a chain running from a broad statutory delegation, through designation of the implementer type by Presidential Decree, qualification screening by reference to the subordinate legislation of another statute, a designation disposition conditioned on the consent of a majority of landowners, to the deeming of implementer status under the related statutes. Third, five legal limitations are identified in that structure: the tension between delegated legislation and the statutory enumeration of implementer types; the indeterminacy of qualification requirements arising from reference to another statute's decree; the absence of protective provisions for landowners after designation; the imbalance of regulation caused by including self-managed REITs alongside externally managed REITs; and the incoherence with the supplementary character of the designated developer scheme under Article 27 of the Urban Renewal Act. The absence of applied cases is treated as a factual circumstance distinct from these legal limitations. Conclusions and proposals. Immediate extension to the general Urban Renewal Act is not yet normatively warranted. This study proposes, first, qualification requirements designed on a dual-structure principle (screening both the company and its asset management company) and a differentiation principle by REITs type; second, protection of landowners through the coherence of contribution-in-kind valuation and management-and-disposal valuation, the coexistence of both lines of disclosure, the closure of the conflict-of-interest gap in service contracts, and the guarantee of a collective decision-making channel and an exit route;