SOUTH KOREA Law and Practice Contributed by: Junghwan Lee, Dong Seok Woo, Jun Woo Cho and Jee In Kim, Lee & Ko
4. Planning and Zoning 4.1 Planning and Zoning Framework
tees, such as urban planning or architectural commit - tees. In certain cases, public inspection or consulta - tion procedures may also be required. In general, third parties do not have a broad right to object to develop - ment approvals unless their legally protected interests are directly affected. In such cases, affected parties may challenge the relevant administrative decision through administrative litigation. Appeals must be filed within the statutory time limits under applicable administrative law. Planning and zoning restrictions are enforced by the relevant government authorities. Non-compliance with permits or applicable regulations may result in administrative sanctions, including suspension or revocation of permits, corrective orders or fines, and, in certain cases, criminal penalties. 5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets Investors in Korea typically use three vehicles to hold real estate: REITs (under the Real Estate Investment Company Act), real estate funds (REFs) under the Capital Markets Act, and project financing vehicles (PFVs) under the Restriction of Special Taxation Act. REFs are widely used due to their flexibility and ease of formation, with trust-type structures most common – particularly for domestic investors to avoid affiliate designation issues – while foreign investors often pre - fer corporate-type REFs. REITs and PFVs must be joint-stock companies. REITs are generally used for long-term holdings or listed structures, whereas PFVs are temporary vehicles for development projects with tax benefits. However, PFVs have been criticised for low equity levels, and recent reforms promoting higher-equity Project-REITs are expected to increase REIT usage in development. 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity REFs REFs are managed by a licensed asset manager, with a trustee responsible for custody. Public REFs must
The National Land Planning and Utilization Act estab - lishes the framework for land use planning and zoning, while the Building Act regulates building standards, design and construction. At the national level, the Ministry of Land, Infrastruc - ture and Transport formulates overarching land use policies and planning guidelines. At the local level, municipal governments are responsible for imple - menting zoning plans, granting development and building permits, and enforcing applicable regulations. Land use is regulated through zoning classifications and land use plans, which designate permitted uses and development intensity. In addition, various sector- specific laws and local ordinances may impose further restrictions depending on the nature and location of the project. Compliance with these regulatory frameworks is required in order to obtain the relevant permits and approvals for development and construction, and non-compliance may result in administrative sanc - tions or restrictions on use. 4.2 Development Process, Challenges and Enforcement Development rights in South Korea are obtained through administrative approvals, primarily including development permits and building permits. The appli - cable process depends on the type and scale of the project, and is governed by zoning regulations and land use plans under the National Land Planning and Utilization Act. For certain projects, particularly large-scale devel - opments or those requiring more detailed planning control, a district unit plan may be established or amended. Such plans provide more specific param - eters for land use, building density and design within a designated area, and form the basis for subsequent permitting. Depending on the nature of the project, approvals may be subject to review by relevant municipal commit -
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