SOUTH KOREA Law and Practice Contributed by: Hyeon Kang, Tae Kyoon Kim, Seungil Hong and Sung-Ho Moon, Bae, Kim & Lee LLC
backed by commercial buildings. This allows investors to trade on the platform while record - ing the transactions on a blockchain, with the benefit of exemptions from certain securities regulations. The regulatory sandbox provides a transitional exemption for new business models for a period of up to four years. These recent advancements suggest an increas - ing influence of disruptive technologies on real estate markets. The Korean government is grad - ually enhancing legislative measures regarding virtual assets and tokenised securities while continuing to utilise the regulatory sandbox as a temporary framework for innovative business models. This approach also serves as a test - bed to identify areas requiring further regula - tory refinement. Notably, in February 2025, the financial regulators issued a legislative notice to accommodate business models previously addressed under the regulatory sandbox regime. This includes the introduction of a new invest - ment brokerage licence permitting the operation of fractional investment platforms that issue non- monetary trust interests backed by real estate and other diverse assets. In line with this trend, digital assets and block - chain are expected to become key instruments for securitising real estate and raising funds. The evolution and regulation of these new technolo - gies and products will continue to be significant topics within Korean real estate capital markets in the future. 1.3 Proposals for Reform The Ministry of Land, Infrastructure, and Trans - port (MOLIT) has identified the long-term and stable growth of the real estate investment trust (REIT) industry as a key measure for revitalis - ing the real estate market. On 17 June 2024, it announced the REITs Revitalization Plan for
Increasing National Income and Advancing the Real Estate Industry and is currently working to amend the Real Estate Investment Compa - ny (Trust) Act (REIT Act) along with its related enforcement decrees and rules. Even under the current REIT Act, REITs are allowed to engage in real estate development projects. However, practical limitations often arise due to various regulations, such as REIT business (change) authorisation, stock diversi - fication (public offering obligations), and disclo - sure/reporting requirements, which significantly hinder the use of REITs in real estate develop - ment. To address these challenges, MOLIT plans to introduce a new initiative called Project Real Estate Investment Company. This initiative aims to ease regulations during the development stage by adopting a two-pronged approach: regulations intended to protect general investors will be substantially relaxed during the develop - ment phase, while investor protection mecha - nisms will be applied during the operation phase. Currently, a bill to partially amend the REIT Act has been introduced and is under review by the National Assembly, with plans for it to be to be passed in the first half of 2025. The government announced the Senior Residence Revitalization Plan at the Economic Ministers’ Meeting on 23 July 2024. Through this initiative, the govern - ment aims to significantly relax regulations on the establishment and operation of senior residenc - es, as well as those covering the entire supply process, including land acquisition and funding. The Senior Residence Revitalization Plan aims to promote the expansion of senior residence sup - ply and develop policies to enhance customised support for elderly consumers. Specifically, the government intends to enact a special law to promote senior residences and amend related laws during the first half of 2025. Accordingly, it
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