South Korea to ease regulations on knowledge industry centers

The South Korean government has announced a comprehensive plan to address high vacancy and unsold rates in knowledge industry centers. Recent data shows that centers completed within the last three years have an average vacancy rate of 43.5% and an unsold rate of 26.9%.

To stimulate demand, the government is transitioning to a ‘negative regulation’ system, which allows almost all business types to occupy these centers, excluding only gambling, hazardous, or environmentally harmful industries. This change aims to attract new industries such as AI software, urban logistics, and drone services.

Additional measures include:

• Converting vacant centers in the Seoul metropolitan area into public rental housing for youth and newlyweds through the Korea Land and Housing Corporation (LH). • Allowing the conversion of vacant centers in industrial areas into residential officetels, supported by temporary exemptions from parking requirements and deferred acquisition taxes. • Implementing a supply-demand control system where local governments must assess nearby vacancy and market impact before approving new construction. • Providing remodeling fund loans and mortgage guarantees through the Housing & Urban Guarantee Corporation (HUG).

The government also plans to hold a public contest to rename the ‘knowledge industry center’ designation to better reflect its evolving role.