In November 1997, the country was hit by a foreign exchange crisis. It was necessary to undertake extensive economic restructuring and deregulation in various sectors. The newly inaugurated Kim Dae-jung administration abolished many regulations on real estate transactions to increase the number of sales. The requirement that real estates sales in certain designated areas had to be reported for approval was abolished. Regulations on land owned by companies for non-business purposes were cut drastically. The limit on the ownership of land for housing and the excessive-profit tax on land sales was dropped.
Property-related taxes were lowered to increase demand for land in the private sector. The government stepped up the stockpiling of land to counter shrinking demand for land in the private sector.
There were limits to dealing with the problem of surplus land if only domestic financial resources were to be relied upon during the economic crisis. As a result, the domestic property market was completely opened to foreign investors in 1998. In addition, new property financing techniques were adopted in 1998 to facilitate real estate securitization, including asset backed securitization (ABS), mortgage-backed securitization (MBS) and real estate investment trusts (REITs). The property market was stabilized by early 2000, helped by such measures.
Source : SaKong, Il and Koh, Youngsun, 2010. The Korean Economy Six Decades of Growth and Development. Seoul: Korea Development Institute.