Seoul will introduce a transferable development rights (TDR) program in the second half of this year, allowing the sale of unused floor area ratios (FAR) restricted by zoning regulations, the city government announced Feb. 23. It will be the first program of its kind in South Korea.

The city plans to enact the necessary ordinance in the first half of the year, targeting areas with strict development restrictions, such as around Pungnaptoseong Fortress in Songpa District and Gimpo Airport in Gangseo District.

A view of a neighborhood inside Pungnaptoseong Fortress in Seoul's Songpa District on the morning of March 23, 2023. Redevelopment and reconstruction have stalled due to building restrictions, leading to urban decay. Empty lots and parking spaces are scattered among aging houses built 30 to 40 years ago. The government acquired some of the lots through compensation for archaeological excavations./Park Sang-hoon

Under the TDR program, developers unable to use their full FAR due to height limits can sell the unused portion to other redevelopment or reconstruction projects. For example, if a complex with a legal FAR of 1,000% can only build up to 400% because of nearby cultural heritage restrictions, the remaining 600% can be sold to a project outside the restricted zone. This allows developers to offset losses while making purchasing projects more economically viable.

FAR refers to the ratio of a building’s total floor area to the size of the land it occupies. Higher FARs permit taller structures. Seoul enforces height limits within a 100-meter radius of cultural heritage sites like Gyeongbokgung Palace, Deoksugung Palace, and Seolleung Royal Tombs. Similar restrictions apply near Pungnaptoseong, where deep excavation is prohibited, and around Gimpo Airport, where height limits ensure safe aircraft operations. According to city officials, these restricted zones cover about 1.52 million square meters—roughly half the size of Yeouido.

“Residents near cultural heritage sites or airports often face significant disadvantages because they cannot fully utilize their FAR,” a city official said. “Allowing the sale of unused FAR will help mitigate this infringement on property rights.”

The TDR program is already in use in cities like New York and Tokyo. New York’s One Vanderbilt skyscraper, for instance, was built to 93 stories with an FAR of nearly 3,000% by acquiring rights from Grand Central Terminal. Similarly, Tokyo’s Shin-Marunouchi Building and GranTokyo, both over 38 stories tall, purchased unused FAR from Tokyo Station, which used the proceeds to restore its historic façade.

To ensure smooth implementation, Seoul will first designate pilot sites, with Pungnaptoseong, Bukchon Hanok Village, and areas around Gyeongbokgung Palace among the likely candidates. The program will apply not only to new construction but also to existing buildings, enabling owners to fund renovations with proceeds from FAR sales.

The city plans to limit transactions to nearby developments, preventing, for example, the transfer of FAR from central Seoul to redevelopment zones in Gangnam. Transactions will also be capped at the legally permitted FAR for each zoning type.

Seoul will host an academic conference on Feb. 25 to further discuss the program’s framework. Experts believe the initiative could accelerate stalled urban redevelopment projects.

“Like in New York and Tokyo, this program could promote high-density, mixed-use development,” said Ko Jong-wan, a real estate investment expert.

However, concerns remain. “Price gaps between sellers and buyers could hinder widespread adoption,” said Lee Chang-moo, an urban planning professor at Hanyang University.