[Editorial] Market for New Retail Space Must be Made Transparent

Cases where people have contracted for installment purchases of commercial space only to suffer losses are on the rise again. That would be the result of renewed attention to market for retail space since the August 31st Real Estate Measures were announced. How utterly frustrating it must be for people who went through great difficulty to put the funds together to buy the right to purchase retail property only to have the owner of the building not keep his end of the commitment, or have the initial advertisement be entirely unlike what the truth is, and to therefore lose all they invested.

With the increase in cases gone bad, the government decided to adopt a "late real estate parceling out program," starting in April of this year, in which developers can only start selling purchasing rights when more than two thirds of a building's framework is complete. The losses continue, however, at projects that began before the program began. The experts say that the program, too, has a lot of loopholes in it. It only applies when the space involved total of 3,000 square meters, and they say there are many instances where developers evade the system by reducing the space slotted for purchase and leaving what exceeds the cutoff for rental use.

The fundamental problem is that the system for selling purchasing rights to retail space is complicated and lacks transparency. There are many times when the real entrepreneur hides behind an entity that is there just in name, and then there are agencies of middlemen involved as well. That makes it hard to hold the right people responsible when things go wrong, and it is why illegal and dishonest methods and false advertising run rampant. The only conclusion you can make is that the system and the government's enforcement programs have big holes in them.

The selling by installment of new retail space is a matter of private contract, but the government has a responsibility to keep the market in order and prevent well-intentioned people from being burned. It needs to figure out what the problems are, how far it should go in punishing perpetrators of the illegalities, and whether there are better ways for keeping those responsible in check, and by doing so stabilize the market.

The Hankyoreh, 22 November 2005.

[Translations by Seoul Selection].