Enactment and Implications of Act on Management of Real Estate Development Projects and Its Enforcement Decree

On May 27, 2025, the Act on the Management of Real Estate Development Projects (the “Real Estate Development Projects Management Act”) was enacted and promulgated into law to establish a regulatory framework for managing real estate development projects. Subsequently, on November 28, 2025, the Enforcement Decree of the Real Estate Development Projects Management Act (the “Enforcement Decree”) was also enacted and promulgated into law. The Real Estate Development Projects Management Act and its Enforcement Decree took effect as of November 28, 2025.

Previously, the primary legal basis for regulating real estate development projects was the Act on the Management and Promotion of Real Estate Development Business (the “Real Estate Development Business Act”). However, the regulatory system under the Real Estate Development Business Act was often criticized for its narrow focus on the registration and post-registration oversight of real estate developers. In response to such concerns, the Real Estate Development Projects Management Act and its Enforcement Decree have been enacted to establish a comprehensive management system that enables systematic oversight of individual development projects from the pre-approval stages.

The key details of the Real Estate Development Projects Management Act and its Enforcement Decree are as follows:

Scope of Reporting Obligations and Reporting Procedures

Projects subject to reporting obligations include mixed-use development projects, improvement/reconstruction projects and complex development projects carried out under existing statutes such as the Special Act on Public Housing, Urban Development Act, Urban Mixed-Use Development Act, Industrial Complex Act and Housing Act. In addition, under the Building Act, any construction project with a gross floor area of 5,000 m² or more in relation to, among others, neighboring convenience facilities, retail facilities, office buildings, accommodation facilities, cultural and assembly facilities, hospitals, welfare facilities, factories, warehouses, data centers and tourism or rest facilities is now subject to mandatory reporting, effectively bringing most commercial and industrial real estate developments within the scope of the mandatory reporting obligation. Furthermore, logistics complex development projects, complex transit center/station area development projects, and improvement/reconstruction projects under the Act on Special Cases Concerning Unoccupied House or Small-Scale Housing Improvement, all of which typically involve large-scale land development or housing construction, are also now included within the scope of the mandatory reporting obligation.

If a project is subject to the mandatory reporting obligation, the project operator must comply with the following reporting obligations:

The project operator must submit to the Minister of Land, Infrastructure and Transport (the “MOLIT”) a report containing the business plan, financial status and funding plan within 60 days of the earliest of the following dates: (i) the date of execution of the relevant project implementation agreement, (ii) the date of land acquisition, (iii) the date of establishment of the relevant special purpose company (“SPC”), (iv) the date of obtaining relevant permits or approvals, and (v) any other date that can be seen as concretizing the implementation of the project (the “Reporting Reference Date”).
Additionally, the project operator must (i) report the progress on the project within one month after the end of each quarter, and (ii) include in the report the details on the business plan (e.g., the composition of the project operator, project type and method, development cost, etc.) and the sources of funding including equity and borrowings.

The report must also include detailed financial data (e.g., project overview, land acquisition status, pre-sale rate, loan status, etc.). Requiring such data reflects the government’s intent to strengthen supervision and risk management on the individual project level.

The above-mentioned mandatory reporting system is expected to take effect on May 28, 2027 and will apply to projects whose Reporting Reference Date occurs after May 28, 2027.

Business Feasibility Assessment Framework and Professional Assessment Agency

To prevent business feasibility assessments for project financing (“PF”) loans from becoming a mere formality, the MOLIT will (i) establish detailed standards, procedures and methodologies for conducting business feasibility assessments for PF loans, and (ii) authorize designated professional assessment agencies to conduct such assessments. Agencies seeking designation as professional assessment agencies must have the necessary organizational structure, qualified personnel and a proven track record in professional research, analysis and evaluation or consulting related to real estate and PF.

As the specific criteria and requirements for such designation will be further prescribed by and through a notification issued by the MOLIT, it will be necessary to keep track of future developments on this topic.

Establishment of Dispute Mediation Procedure for Real Estate Development Projects

To facilitate the resolution of disputes arising from real estate development projects, a Real Estate Development Project Mediation Committee (the “Committee”) will be established within the MOLIT. When the parties involved agree to the Committee’s proposed mediation resolution, such resolution will have the same legal effect as a judicial reconciliation. The Real Estate Development Projects Management Act and its Enforcement Decree further detail the structure, operation and procedures of the Committee. Specifically, (i) the Committee is authorized to mediate disputes concerning matters such as land sale agreements, business plans/project implementation agreements and license or permit-related issues, (ii) a Working Subcommittee chaired by the Director General for Land Policy within the MOLIT will be established to manage practical mediation matters to enhance procedural efficiency, and (iii) upon receiving an application for mediation, the Committee must decide whether or not to commence the procedure within 15 days from the application date and prepare a proposed mediation resolution within 60 days (a one-time extension of up to 60 days may be permitted under exceptional circumstances).

This mediation process is designed to provide a more efficient mechanism for resolving disputes related to real estate development projects. Companies are advised to follow how the Committee becomes operational in practice and to consider utilizing this mediation process as a means of dispute resolution.

Implications

The enforcement of the Real Estate Development Projects Management Act and its Enforcement Decree is expected to bring about significant changes to real estate development practices. For example, if standardized business feasibility assessments through designated professional assessment agencies become mandatory, it may become more difficult to secure PF loans and lead to a change in the lending practices of financial institutions. Moreover, as the Real Estate Development Projects Management Act and its Enforcement Decree shift the regulatory framework from post-registration oversight to a proactive and continuous management system, each project operator will need to establish internal processes that enable the timely collection, monitoring and reporting of key project data, such as funding structures, permit status and pre-sales performance, all of which must be overseen from the earliest stages of the project to ensure compliance with the new regulatory requirements.

[Korean Version]

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