sustainability

Article
Optimal Project Planning for Public Rental Housing
in South Korea
Jae Ho Park 1 , Jung-Suk Yu 2, * and Zong Woo Geem 3, *
1 Department of Social Housing, Gyeonggi Urban Innovation Corporation, Suwon 16556, Korea;
jhpark1@gico.or.kr
2 School of Urban Planning & Real Estate Studies, Dankook University, Yongin 16890, Korea
3 College of IT Convergence, Gachon University, Seongnam 13120, Korea
* Correspondence: jsyu@dankook.ac.kr (J.-S.Y.); zwgeem@gmail.com (Z.W.G.)




Received: 22 December 2019; Accepted: 13 January 2020; Published: 14 January 2020


Abstract: Although Korea has made notable progress in the availability of public rental housing,
Korea’s public rental housing representing 6.3% of the country’s total housing is still below the 8%
OECD average from 2016. The Seoul Metropolitan Area (composed of Seoul City, Incheon City, and
Gyeonggi Province) has nearly 50% of the country’s population, but 11% of the nation’s territory,
meaning the area suffers from an acute shortage of public rental housing. This is a serious problem
which is hampering the sustainability of Korean society in general. We will examine the possibility of
improving this public housing problem using certain algorithms to optimize decision making and
resource allocation. This study reviews two pioneering studies on optimal investment portfolio for
land development projects and optimal project combination for urban regeneration projects, and then
optimizes a public housing investment combination to maximize the amount of public rental houses
in Gyeonggi province using optimization techniques. Through the optimal investment combination,
public rental houses were found to be more efficiently and sustainably planned for the community.

Keywords: public rental house; sustainability; optimal project combination; genetic algorithm; branch
& bound method

1. Introduction
Korea’s record for improving access to quality housing has been significant. This has been partially
due to the introduction of minimum living standards (e.g., the number of rooms and floor space
being differentiated by the size and composition of households) and by direct government support
for housing construction. However, although the long-term public rental housing inventory has been
steadily rising over the last decade, its share (6.3%) of total housing in 2016 is still below the OECD
average (8%) according to the Korean Ministry of Land, Infrastructure, and Transport [1,2]. South
Korea aims to increase the share of public rental housing to 9% by 2022 [1].
The scarcity of developable land for residential purposes in South Korea is more problematic in
urban areas such as Seoul. The Seoul Metropolitan Area (SMA) —composed of Seoul city, Incheon
city, and Gyeonggi province—represents 11% of Korea’s territory and accommodates almost 50%
of the national population. As a result, housing demand in SMA is very high [2]. Strong demand,
geographical constraint, and extensive land use regulation, such as greenbelt policy, may be leading
to high house prices in SMA. Young, senior, and low-income households are particularly affected by
soaring house prices in this region. The supply of public rental housing helps to solve this problem
by expanding the stock of affordable housing, and it also indirectly contributes by keeping a lid on
private rent prices.
According to Housing Welfare Road map [1], total housing stock increased by 3.58 million (22.0%)
from 16.3 million in 2007 to 19.88 million in 2016 but housing prices increased by 24.9%, meaning it is

Sustainability 2020, 12, 600; doi:10.3390/su12020600 www.mdpi.com/journal/sustainability

Sustainability 2020, 12, 600 2 of 14

not easy for ordinary people to buy houses. The Price to Income Ratio (PIR) is 5.6 and the PIR for the
lowest-income group is 9.8 in South Korea.
So far, researchers have performed useful studies in the field of land-project optimization and
public rental housing supply using optimization techniques such as the genetic algorithm (GA) and
branch and bound method (B&B).
The genetic algorithm is useful tool which has been used to find the spatial optimization of
multi-objective and multi-site land use allocation [3], to forecast the private housing demand in Hong
Kong [4], to search for optimal solutions to a land use allocation problem with multiple objectives and
constraints in case of Tongzhou Newtown in Beijing, China [5], to formulate and develop municipal
land use plans in Galicia, Spain [6], and to undertake land-use spatial optimization in Gaoqiao Town,
Zhejiang Province, China [7]. The genetic algorithm has also been used to maximize land prices
and reduce incompatibility among land uses of an area for urban planners [8], enhance real estate
appraisal forecasting with ridge regression [9], optimize transportation infrastructure planning in
Provo, Utah, USA [10] or urban land-use allocation in the case study of Dhanmondi Residential Area,
Dhaka, Bangladesh [11], search for a spatial multi-objective land use optimization model [12], solve
multi-objective land use planning in the Netherlands [13], and support simulating multi-objective
spatial optimization allocation of land in Changsha, Zhuzhou, Xiangttan city in China [14].
While the above studies used GA in real estate problems, other researchers have used other
intelligent techniques. Jin and Yu [15] analyzed the risk of housing rearrangement projects using the
technique of fuzzy theory [16], and Bae and Yu [17] predicted apartment housing prices using the
technique of machine learning [18].
There are two pioneering studies in real estate optimization for South Korean projects. The first
one considered the optimal investment portfolio for land development projects [19], and the second
one considered the optimal project combination for urban regeneration projects [20]. Both studies used
both the genetic algorithm and the branch and bound method to obtain combinatorial optimization
solutions in real estate cases. Park et al. [21] also proposed an optimization model for another type of
real estate problem involving investment scheduling for public rental housing projects. However, their
initial study has the limitation of not considering real-world cases. Thus, this study aims to focus more
on practical approach in investment optimization for public rental housing projects by considering
real-world project data in South Korea.

2. Methodologies
The genetic algorithm is the optimal problem-solving method, and it involves using the natural
selection phenomenon together with genetics-related operators such as crossover, mutation, and
reproduction. The branch and bound method is a technique used for discrete and combinatorial
optimization problems.

2.1. Genetic Algorithm

The Genetic algorithm was first introduced by John Holland in the 1960s [21]. GA is a technique
for moving from one population of ‘chromosomes’ to a new population using selection operators such
as crossover, mutation, and inversion. Each chromosome is composed of ‘genes (digital bits)’, and each
gene is filled with a particular ‘allele (zero or one)’. In the selection operation, a group of chromosomes
that are allowed to be reproduced is selected in the population, and the fitter chromosomes have a
higher chance to produce offspring. Crossover exchanges subparts of two chromosomes, generally
mimicking biological recombination between two chromosome organisms. Afterwards, mutation
arbitrary changes the values of some places in the chromosomes and inversion reverses the order of an
adjacent section of the chromosome, thus rearranging the order in which genes are spread.
Sustainability 2020, 12, 600 3 of 14

2.2. Branch and Bound Method

The Branch and Bound method (B&B) was developed independently by Land and Doig in 1960
and by Murty, Karel, and Little in 1962 [19]. B&B is an analytical approach for discrete optimization
problems. Unlike continuous optimization problems, discrete optimization problems are not smooth
functions because integer restrictions are placed on (at least some of) the relevant variables. Discrete
optimization problems are solved by enumerative methods that investigate the feasible solution set.
B&B is an attractive partial enumeration strategy for optimization problems because it analyzes each
subgroup with a lower bound or upper bound (branching and bounding) and deletes some groups with
no feasibility (pruning), thus finding optimal combination in remaining groups (retracting). Therefore,
B&B has four steps as follows: (1) branching, (2) bounding, (3) pruning, and (4) retracting.

3. Optimization for Land Development Projects

One of pioneering studies in public real estate optimization in South Korea focused on land
development planning [19]. The summary of the study can be reviewed as follows.
Government-owned public companies often have a chance to decide the most reasonable
investment portfolio from a number of new projects under a limited budget. Here, the limited
budget can be a major constraint in this study. Another constraint in land development problems is the
balance between profitability and public interest. If a public company chooses projects with a high
profit margin but low public interest in order to maximize the total return on investment, its role for
public good is likely to be reduced.
The third constraint in land optimization is the equitability in each region. If a project is
concentrated on a specific region, it may be criticized for not focusing on regionally balanced
development. The fourth constraint is the balance among land use purposes, such as new town,
public rental housing, and industrial complexes. There is a minimally required amount constraint for
each purpose.
The fifth constraint involves efficient allocation of human resources. Regarding human resources,
it is necessary to minimize unassigned employees in order to maintain employment. The sixth
constraint is the possibility of joint investment from cooperated companies. While there are some
projects that can be jointly performed with a shared budget and risk, there are other projects that must
be solely completed by a single company.
It is very important to find the best investment combination that will allow public companies to
properly allocate financial resources and maximize return on investment among many new projects
while meeting the constraints described above. It is not easy to rationally derive the optimal business
combination that maximizes the return on investment among many new projects or maximizes the
public interest while meeting the minimum profit goal because there is currently no customized
methodology for achieving this in South Korea. As such, we must rely on the optimal business
combination (combinatorial optimization) that maximizes the return on investment while meeting
multiple constraints from a group of new project candidates that have different characteristics.
In line with the above-mentioned factors (return on investment maximization, budget limitation,
public interest consideration, regional balance, land purpose balance, human resource management,
joint investment possibility), an optimal land development model was proposed as follows:
P
- Objective function: Max i (Ri · Xi ): maximization of the return on investment (Ri is the return
on investment (%) for project i)
- Decision variable: Xi : the investment amount on project i (unit: 1010 KRW)
- Constraint 1. i Xi ≤ 110: the total investment amount is equal to or less than 110 × 1010 KRW
P
P P
- Constraint 2. k Xk ≥ 0.3 i Xi , k ∈ Set of non-for-profit projects: the investment for non-for-profit
projects is equal to or more than 30% of total investment
P P
- Constraint 3. k Xk ≤ 0.4 i Xi , k ∈ {East, West, North, South}: the investment in each area is
equal to or less than 40% of total investment
Sustainability 2020, 12, 600 4 of 14

P P
- Constraint 4. k Xk ≥ 0.2 i Xi , k ∈ {New Town, Public Housing, Industrial Complex}: investment
in each business division is equal to or more than 20% of total investment
P
- Constraint 5. i Ni · Sgn(Xi ) ≥ 250: total employees in active projects are equal to or more than
250 (Ni is the number of employees for performing project i; Sgn() is a sign function representing the
sign (0 or 1) of Xi )
Upper Upper
- Constraint 6. 0 ≤ Xi ≤ Xi and Xi is an integer if i is a joint project. Xi = 0 or Xi = Xi if i
is not a joint project. Projects that cannot be jointly invested such as E, F, G, H, M, N, O, P, S, and T
have only two selections such as no investment or whole investment, while projects that can be jointly
invested such as A, B, C, D, I, J, K, L, Q, and R have a partial investment option.
Park et al. [19] also provided a dataset of 20 new candidate projects in South Korea, as shown in
Table 1. Each project has different characteristic in terms of investment amount, profit, public interest,
investment area, business division, number of employees participated, and joint investment possibility.

Table 1. Candidate Land Development Projects.

Investment Partnership
Profit Type Project ROI * Profit Type *** Region Biz Division Personnel
(108 KRW) ** ****
A −2% 1000 Non-for-profit East New town Possible 30
Low profit B 1% 800 Non-for-profit West New town Possible 24
C −1% 600 Non-for-profit South New town Possible 18
D 5% 400 For-profit North New town Possible 12
High profit E 6% 200 For-profit East New town Impossible 6
Industrial
F 5% 1000 For-profit West Impossible 30
complex
Industrial
G 2% 800 Non-for-profit South Impossible 24
complex
Low profit Industrial
H 1% 600 Non-for-profit North Impossible 18
complex
Industrial
I −2% 400 Non-for-profit East Possible 12
complex
Industrial
J 5% 200 For-profit West Possible 6
complex
High profit
K 6% 1000 For-profit South Housing Possible 30
L 5% 800 For-profit North Housing Possible 24
M −2% 600 Non-for-profit East Housing Impossible 18
Low profit N 1% 400 Non-for-profit West Housing Impossible 12
O −2% 200 Non-for-profit South Housing Impossible 6
P 5% 1000 For-profit North New town Impossible 30

High profit Q 6% 800 For-profit East New town Possible 24

Industrial
R 5% 600 For-profit West Possible 18
complex
Industrial
S 1% 400 Non-for-profit South Impossible 12
Low profit complex
T −2% 200 Non-for-profit North Housing Impossible 6
* ROI was assumed based on real project performances. ** Total investment amount is 1.2 trillion KRW, which is over
the total investment budget of 1.1 trillion Korean Won (KRW). *** Non-for-profit: New town projects that are not for
profit but are for regional balance development; Public rental housing and Industrial complex projects that are not
for profit but are for regional balance development. / For-profit: New town projects in attractive location; Public sale
housing and Industrial complexes in attractive locations. **** Local government-owned company may invest with
other public land development companies to reduce financial burden and business risk if partnerships are possible.

This optimization model has 20 decision variables, each of which has an integer or binary number,
and the total number of possible candidate solutions is 3.3 × 1011 , which requires a considerable
computation process.
Sustainability 2020, 12, 600 5 of 14

After computation, this land development planning model found an optimal profit of 3.58
(1010 KRW), as shown in Table 2, which also satisfies the constraints as follows:

Table 2. Result of Land Development Optimization.

Project Area Business Division

Investment Non-for- Profit (10
Project Person
Amount Profit Industrial billion KRW)
East West South North New Town Housing
Complex
A - - - - - - - - - - -
B 8 8 - 8 - - 8 - - 24 0.08
C - - - - - - - - - - -
D 4 4 - - - 4 4 - - 12 0.2
E 2 - 2 - - - 2 - - 6 0.12
F 10 - - 10 - - - 10 - 30 0.5
G 8 8 - - 8 - - 8 - 24 0.16
H 6 6 - - - 6 - 6 - 18 0.06
I - - - - - - - - - - -
J 2 - - 2 - - - 2 - 6 0.1
K 10 - - - 10 - - - 10 30 0.6
L 8 - - - - 8 - - 8 24 0.4
M - - - - - - - - - - -
N 4 4 - 4 - - - - 4 12 0.04
O - - - - - - - - - - -
P 10 - - - - 10 10 - - 30 0.5
Q 8 - 8 - - - 8 - - 24 0.48
R 6 - - 6 - - - 6 - 18 0.3
S 4 4 - - 4 - - 4 - 12 0.04
T - - - - - - - - - - -
Total 90 30 10 30 22 28 32 36 22 270 3.58

- Total investment amount: 90 (1010 KRW) which is less than 110 (1010 KRW).
- Non-for-profit ratio: 33% which is more than 30% of total investment.
- Investment area: East (10), West (30), South (22), North (28). Each area has less than 36 (1010
KRW) which is 40% of total investment.
- Investment division: new town (32), industrial complex (36), public housing (22). Each division
is more than 18 (1010 KRW), which is 20% of total investment.
- Number of employees: 270 which is more than 250.

4. Optimization for Urban Regeneration Projects

Another pioneering study in public real estate optimization in South Korea is urban regeneration
planning [20]. The summary of this study can be reviewed as follows.
According to Lee and Lim [22], urban growth in South Korea has reached its limit, and urban
areas have started to decline. Urban decline has resulted in critical issues such as outflow of the
population, ageing infrastructure, loss of economic capacity, etc. Thus, the ‘urban regeneration’
can be a new strategy in South Korea’s national urban policy for maintaining sustainable urban
circumstances and revitalizing enervated communities. This concept of urban regeneration is not
only for city planning-oriented approaches which can develop sustainable economic and physical city
environments, but also for social and governance-oriented practices which can accumulate social capital.
Thus, South Korea’s urban regeneration policy is highly related to the idea of urban sustainability.
There are various models such as the ‘Downtown model (DM)’, ‘Economic support model (ESM)’,
and ‘Public company proposal model (PCPM)’ for urban regeneration projects. The DM is a project
model used to support the recovery of public functions and the vitalization of commerce through
cooperation with historical, cultural, and traveling resources in old downtown areas where the decline
Sustainability 2020, 12, 600 6 of 14

of public services and the decline of commerce are severe. The ESM is a project model that creates
new industrial complexes to increase jobs in areas where urban decline is severe. The PCPM has been
proposed by public companies as a plan for urban regeneration in certain cities, while other models
were proposed by local governments.
Each project can be evaluated based on various criteria and correspondingly earned certain scores,
as shown in Table 3.

Table 3. Evaluation Criteria and Score for Urban Regeneration Projects [23].

Evaluation Criteria Score Points Detail Evaluation Criteria Score Points

Urgency and Necessity Urgency of project (Region deterioration, Safety) 15
30
of project Necessity of project (Community participation) 15
Local government’s organization for project 5
40 Relevance of project plan 10
Feasibility of project plan
Plan of land acquisition and finance for project 15
Community participation and empowerment training 10
Housing welfare and improvement of quality of life 10
30 Job creation effect 10
Effect of project
Social integration and sustainability 5
Countermeasure towards side-effects of the real
5
estate market

The South Korean central government plans to choose 13 DM projects, 2 ESM projects, and
10 PCPM projects from a total of 66 projects developed by 16 local governments based on the evaluation
of the Urban Regeneration Special Committee. Here, each local government can apply for a maximum
of four projects. If the central government selects projects with respect to project effects themselves,
there will be unselected regions, which will violate the principle of regionally balanced development.
For this reason, a combinatorial optimization model was proposed and could provide optimal solutions
while satisfying various constraints.
The model for optimally selecting urban regeneration projects can be formulated as follows:
P
- Objective function: Max i (Si · Xi ): maximization of urban regeneration effect (Si is earned
score for project i)
- Decision variable: Xi ∈ {0, 1}: investment decision for project i (1 means investment; and 0 means
no investment)
P
- Constraint 1. k Xk = 13, k ∈ Set of downtown-focused projects
P
- Constraint 2. k Xk = 2, k ∈ Set of industry-oriented projects
P
- Constraint 3. k Xk = 10, k ∈ Set of public-corporation-proposed projects
P
- Constraint 4. 1 ≤ j X j ≤ 3, j ∈ Set of non-Gyeonggi province projects (Projects should be
selected in each local government from a minimum of one project to a maximum of three for regionally
balanced development)
P
- Constraint 5. 2 ≤ j X j ≤ 4, j ∈ Set of Gyeonggi province projects (Because Gyeonggi province
has lots of urban regeneration demand, projects should be selected from a minimum of two projects to
a maximum of four)
Total number of candidate solutions for this combinatorial problem including constraint-violated
ones is 266 (≈7.38 × 1019 ), which actually requires a major computation process.
The results of this optimal project combination problem using GA and B&B are shown in Tables 4–6.
The total score (2198) from B&B as shown in Table 5 is slightly better than that (2173) of GA as shown in
Table 4, and Table 6 shows the overall result from B&B. Here, Busan stands for Busan Metropolitan City,
Daegu stands for Daegu Metropolitan City, Incheon stands for Incheon Metropolitan City, Gwangju
stands for Gwangju Metropolitan City, Daejeon stands for Daejeon Metropolitan City, Ulsan stands for
Sustainability 2020, 12, 600 7 of 14

Ulsan Metropolitan City, Jeju stands for the Jeju Special Self-governing Province, and Sejong stands for
the Sejong Special Self-governing City.

Table 4. Selected Projects of Urban Regeneration Planning using GA.

Project Model (Number) Project Name

DM (13) B1, C1, E1, F2, G3, H1, J2, K1, M1, M2, N1, O1, P1
ESM (2) A4, B4
PCPM (10) C3, D3, F3, G4, H2, I2, J3, K2, L3, M3

Table 5. Selected Projects of Urban Regeneration Planning using B&B.

Project Model (Number) Project Name

DM (13) B1, C1, E1, F2, G2, G3, H1, K1, L2, N1, O1, P1, P2
ESM (2) D4, K4
PCPM (10) A3, H2, I2, J3, K2, L3, M3, N2, O2, P3

Table 6. Overall Result of Urban Regeneration Planning using B&B.

Local Govt. Project Project Score of Local Govt. Project Project Score of
(Number) Name Model Evaluation (Number) Name Model Evaluation
A1 DM 74 I1 DM 73
A2 DM 76 Chungcheong I2 PCPM 89
Busan (1)
A3 PCPM 86 (North) (1) I3 ESM 84
A4 ESM 83 I4 ESM 76
B1 DM 83 J1 DM 79
B2 DM 83 Chungcheong J2 DM 82
Daegu (1)
B3 PCPM 80 (South) (1) J3 PCPM 91
B4 ESM 83 J4 ESM 79
C1 DM 88 K1 DM 88
C2 DM 73 Jeolla (North) K2 PCPM 94
Incheon (1)
C3 PCPM 86 (3) K3 ESM 79
C4 ESM 75 K4 ESM 86
D1 DM 74 L1 DM 81
D2 DM 73 Jeolla (South) L2 DM 85
Gwangju (1)
D3 PCPM 84 (2) L3 PCPM 92
D4 ESM 83 L4 ESM 79
E1 DM 92 M1 DM 79
E2 DM 84 Gyeongsang M2 DM 82
Daejeon (1)
E3 PCPM 83 (North) (1) M3 PCPM 92
E4 ESM 82 M4 ESM 78
F1 DM 73 N1 DM 85
F2 DM 86 Gyeongsang N2 PCPM 89
Ulsan (1)
F3 PCPM 85 (South) (2) N3 ESM 84
F4 ESM 77 N4 ESM 84
G1 DM 80 O1 DM 87
G2 DM 82 O2 PCPM 90
Jeju (2)
Gyeonggi (2) G3 DM 86 O3 ESM 81
G4 PCPM 85 O4 ESM 80
G5 ESM 81 P1 DM 87
G6 ESM 83 P2 DM 83
Sejong (3)
H1 DM 95 P3 PCPM 90
Gangwon (2) H2 PCPM 89 P4 ESM 77
H3 ESM 81
H4 ESM 83
 G4 PCPM 85 O4 ESM 80
G5 ESM 81 P1 DM 87
G6 ESM 83 P2 DM 83
Sejong(3)
H1 DM 95 P3 PCPM 90
Gangwon H2 PCPM 89 P4 ESM 77
Sustainability 2020, 12, 600 8 of 14
(2) H3 ESM 81
H4 ESM 83
5. Optimal Project Combination for Public Rental Housing
5. Optimal Project Combination for Public Rental Housing
While previous real estate optimization studies [19,20] were based on artificial examples on
While previous
investment amount, return on realinvestment,
estate optimization studies [19,20]
the evaluation score for were based regeneration
a urban on artificial examples
project, on
etc.,
investment amount, return on investment, the evaluation score for a urban
this study focused on a real-world case of a new town project in South Korea. We planned to find regeneration project, etc.,
this study focused on a real-world case of a new town project in South Korea. We planned to find a
a optimal public housing investment combination to maximize the amount of public rental houses
optimal public housing investment combination to maximize the amount of public rental houses in
in Gwanggyo, which is one of the second-stage new towns. Gwanggyo new town is a planned city
Gwanggyo, which is one of the second-stage new towns. Gwanggyo new town is a planned city
surrounding part of part
surrounding Suwon city and
of Suwon city part of Yongin
and part city.city.
of Yongin It is located
It is located2525km
kmsouth
south from Seoul,asas
from Seoul,
shown with a red rectangle in Figure 1. In 2004, Gwanggyo new town was designated
shown with a red rectangle in Figure 1. In 2004, Gwanggyo new town was designated by Gyeonggi by Gyeonggi
Province,Province,
Suwon Suwon
city, Youngin city, and
city, Youngin city,by
and a local-government-owned
by a local-government-ownedreal-estatereal-estate company named
company named
Gyeonggi Urban Innovation
Gyeonggi Urban InnovationCorporation (GICO).
Corporation Gwanggyo
(GICO). Gwanggyo newnew town,
town,which
which will
will accommodate
accommodate
more thanmore thanhouseholds,
31,000 31,000 households,
was notwasonly
not only intended
intended for for
thethe purpose
purpose ofofproviding
providing increased
increased housing
housing
supply but also for several regional purposes such as a local-government
supply but also for several regional purposes such as a local-government office, convention center, office, convention center,
and
and commercial
commercial zone. zone.

Gwanggyo

Figure 1. Map of Gwanggyo New Town (Google and Naver map).

Figure 1. Map of Gwanggyo New Town (Google and Naver map).

The percentage of public rental housing investment from 2008 to 2018 by GICO was very low,
The percentage of public rental housing investment from 2008 to 2018 by GICO was very low,
and during this period the housing investment for public sale occupied most of relevant company
and during this period the housing investment for public sale occupied most of relevant company
activities, as seen in Table 7 (the data was extracted from an internal report).
activities, as seen in Table 7 (the data was extracted from an internal report).

Table 7. The Public Sale and Rental House Construction Record of GICO.

Type Housing Project Construction Period Investment (108 KRW) Detail of Investment
Sub Total 30,345
Gimpo-Yangchon 2008.4~2010.12 437 Land price +Construction cost
Gwanggyo Edu-town 12 2009.11~2012.11 2613 Construction cost (GICO’s land)
Gwanggyo Edu–town 13–15 2009.12~2012.12 2225 Construction cost (GICO’s land)
Sales Housing
Gimpo-Hangang Ab–1 2009.12~2013.2 2617 Land price +Construction cost
Gimpo-Hangang Ab–7 2009.12~2013.2 3028 Land price +Construction cost
Wirye A2–11 2014.4~2016.9 6758 Land price +Construction cost
Wirye A2–2 2015.4~2017.9 4661 Land price +Construction cost
Namyangju-Dasan B2 2015.4~2017.11 2166 Construction cost (GICO’s land)
Namyangju-Dasan B4 2015.4~2017.11 2938 Construction cost (GICO’s land)
Namyangju-Dasan S1 2015.12~2018.6 2902 Construction cost (GICO’s land)
Rental Housing Gimpo-Hangang Ab-2 2012.1~2013.2 1091 Land price +Construction cost
Sustainability 2020, 12, 600 9 of 14

On the other hand, all the public rental houses located in Gwanggyo New Town were supplied
by the Korea Land Housing Corporation (KLHC), which is the central government-owned company
with more than 32 trillion KRW of capital as of the first half of 2019 (www.lh.or.kr). GICO, who had
about 1.6 trillion KRW of capital as of the first half of 2019 (www.gico.or.kr), did not build any public
rental houses in Gwanggyo New Town. Because GICO had more than 4 trillion KRW of loans resulting
from land acquisition and development expense with regard to Gwanggyo New Town from 2012 to
2014, it had to sell land for public rental housing to KLHC rather than construct and operate public
rental houses. Table 8 shows the list of public rental house projects developed by KLHC and the
corresponding construction costs. But it would be more desirable for GICO to supply some public
rental houses to satisfy its mission statement. If the GICO had used 3034.5 billion won, which was
originally invested for the 10 public sale house projects from 2008 to 2018, to construct rental houses
and sales houses instead, it would have been a better decision that met the purpose of public interest.

Table 8. Estimated Cost of Public Rental House Projects.

Total Area (m2 ) Estimated Construction Total Construction Cost

Site Name Number of Houses ConstructionCompletion
(A) Cost (KRW) per m2 (B) (108 KRW) of GICO
Total 6956 804,656 8673
A10 701 2013.11 111,002 1196
A11 637 2013.11 102,334 1103
A16 224 2014.7 34,680 374
A19 1373 2011.11 112,458 1,077,893 1212
A23 258 2014.2 39,979 431
A24 394 2014.2 54,883 592
A25 146 2011.10 13,091 141
A26 1132 2013.12 172,477 1859
A30 2091 2011.12 163,752 1765

According to a study on housing policy in South Korea [24], Korean housing authorities focused on
the expansion of state-developed housing for sale rather than the provision of rental accommodation. In
order to obtain adequate housing for poor and disadvantaged groups, adequate rental accommodation
is needed to ensure legal security of tenure protection from discrimination and equal access to adequate
housing for all persons and their families.
Here, the total number of combinations with 10 sales of housing sites and 10 rental housing
sites (one rental housing project was developed by GICO as seen in Table 7 and nine projects were
developed by KLHC as seen in Table 8) was 220 because we had to decide whether or not to select each
of 20 housing projects. Thus, instead of total enumeration, we utilized optimization techniques such as
GA and B&B to find an optimal solution.
The objective function and constraints for this housing combinatorial problem were as follows:
P
- Objective function: Max i (Ni · Xi ): Maximization of the number of supplied public rental
houses (Ni is the number of supplied houses from project i)
- Decision variable: Xi ∈ {0, 1}: investment decision for project i (1 means investment; and 0 means
no investment)
P
- Constraint 1: i (Bi · Xi ) ≤ 3034.5: Total investment amount should be less than 3034.5 billion
KRW, which is the total investment amount for public sale house projects from 2008 to 2018 (Bi is
budget for project i)
P
- Constraint 2. k Xk = 9, k ∈ Set of public sale house projects: By slightly reducing the number of
public sale house projects from 10 to 9, GICO can increase public rental houses more.

5.1. Public Rental Housing Planning by Arbitrary Selection #1

GICO usually invests two public sale house projects per one new town, for example
Gimpo-Hangang Ab-1 and Ab-7 in Gimpo-Hangang new town, Wirye A2-2, and Wirye A2-11
 developed
- Objective by KLHC
function: Max ∑ as (𝑁seen
∙ 𝑋 )in Table 8) wasof2thebecause
: Maximization
20
number of wesupplied
had to public
deciderental
whether
houses or(𝑁not to select
eachofofsupplied
is the number 20 housing projects.
houses fromThus,
projectinstead
i) of total enumeration, we utilized optimization techniques
such as
- Decision GA and𝑋B&B
variable: to find
∈ {0,1}: an optimaldecision
investment solution.for project i (1 means investment; and 0
The objective function and constraints for this housing combinatorial problem were as follows:
means no investment)
- Constraint 1: ∑ (𝐵 ∙ function:
- Objective 𝑋 ) ≤ 3034.5 ∑ (𝑁 investment
Max: Total ∙ 𝑋 ): Maximization
amountofshould
the number of supplied
be less publicbillion
than 3034.5 rental houses (𝑁
KRW, which is the
is the total of
number supplied houses
investment amountfrom projectsale
for public i) house projects from 2008 to 2018 (𝐵 is
Sustainability 2020, 12, 600 - Decision variable: 𝑋 ∈ {0,1}: investment decision for project i (1 means investment; 10 of 14
and 0
budget for project i)
means no investment)
- Constraint 2. ∑ 𝑋 = 9, k ∊ Set of public sale house projects: By slightly reducing the number
- Constraint
of public sale house ∑ (𝐵10∙ 𝑋
projects1:from to)9,≤GICO
3034.5 : Total
can investment
increase amount
public rental should
houses be less than 3034.5 billion
more.
in Wirye new town for their business KRW, which is the totalGimpo-Yangchon
portfolio. investment amount for(one publicproject)
sale houseand projects from 2008 to 2018 (𝐵 is
Namyangju-Dasan
5.1. Public budget for project
Rental Housing i)
Planning by Arbitrary Selection #1
(three projects) are exceptional cases. Therefore, we excluded the biggest public sale house project,
- Constraint 2. ∑ 𝑋 = 9, k ∊ Set of public sale house projects: By slightly reducing the number
GICO usually invests two public sale house projects per one new town, for example Gimpo-
Namyangju-Dasan B4 among three Namyangju-Dasan
of public sale house projects from projects.
10 to 9, GICO Then, we redistributed
can increase that investment
public rental houses more.
Hangang Ab-1 and Ab-7 in Gimpo-Hangang new town, Wirye A2-2, and Wirye A2-11 in Wirye new
amount of Namyangju-Dasan town for theirB4 (293,800
business million KRW) to select public rental house projects. The
5.1. Public Rentalportfolio. Gimpo-Yangchon
Housing Planning by Arbitrary (one project)
Selection #1 and Namyangju-Dasan (three
result of arbitrary selection projects)#1are
is shown
exceptional in cases.
TableTherefore,
9. we excluded the biggest public sale house project,
Namyangju-Dasan GICOB4usually
among invests
threetwo public sale houseprojects.
Namyangju-Dasan projects per onewe
Then, newredistributed
town, for examplethat Gimpo-
investmentHangang
amount Ab-1 and Ab-7 in Gimpo-Hangang
of Namyangju-Dasan B4 (293,800 new town,
million KRW)Wirye
to A2-2,
selectand Wirye
public A2-11
rental housein Wirye new
townTable
for 9. Result
their businessof Arbitrary
portfolio. Selection
Gimpo-Yangchon
projects. The result of arbitrary selection #1 is shown in Table 9. #1. (one project) and Namyangju-Dasan (three
projects) are exceptional cases. Therefore, we excluded the biggest public sale house project,
Number of B4 Investment
Namyangju-Dasan among three Namyangju-Dasan Number of Investment
Name of Site Table 9. Result of Arbitrary Selection #1. projects. Then, we redistributed that
Selection
Houses Amount (100m.) Selected Houses Amount (100m.)
investment amount of Namyangju-Dasan B4 (293,800 million KRW) to select public rental house
Gwanggyo A10 projects. The 701result of arbitrary
1196 selectionInvestment X Number
- -
#1 is shown in Table 9. of Investment
Gwanggyo A11 Name of
637Site Number of Houses
1103 AmountX Selection - Amount -
Selected
(100m.) (100m.)
Gwanggyo A16 224 374 Table 9. Result of
X Arbitrary Selection #1.
Houses
- -
GwanggyoA10 701 1196 X - -
Rental house Gwanggyo A19 1373
GwanggyoA11
1212
637 1103
X X
-- Number
-
-
Investment Investment
(10) of
Gwanggyo A23 258 Name
GwanggyoA16 of Site 431 374 X
224 Number of Houses Amount
X -
Selection - -
Amount
Selected
GwanggyoA19 1373 1212 (100m.)
X (100m.)
Gwanggyo A24 394 592 X -- -
Houses -
GwanggyoA23 GwanggyoA10258 701 431 1196X -X - - -
Gwanggyo A25 Rentalhouse 146 141 X - -
GwanggyoA24 GwanggyoA11394 637 592 1103X -X - - -
Gwanggyo A26 (10) 1132 A25 GwanggyoA16
1859
Gwanggyo 146 224 141 X 374X --X - - --
Gwanggyo A30 2091 A26 GwanggyoA19
Gwanggyo 1765
1132 1373 1859 O 1212X 2091
-X - - 1765
-
GwanggyoA30 GwanggyoA232091 258 1765 X 431O 2091 1765-
Gimpo Ab-2 559house
Rental
1091 -X --
Gimpo Ab-2 GwanggyoA24559 394 1091 592X -X - - -
(10)
Sub Total SubTotal
7515 7515
9764
GwanggyoA25 1461 site
9764 selected
1site
141selected 2091
X 1765- 1765
-
Gimpo-Yangchon GwanggyoA26743 1132 437 1859O 743X 437 - -
Gimpo-Yangchon 743
Gwanggyo-Edutown 12 437
GwanggyoA30 1764 2091 2613 O 1765O 743
1764
O 2613
2091 437
1765
Gwanggyo-Edutown 12 1764
Gwanggyo-Edutown GimpoAb-2
13~15 2613
1173 559 2225 O 1091O X
1764
1173 2225- -
2613
Gwanggyo-Edutown 13~15 Gimpo-Hangang
1173 Ab-1 SubTotal2225
1167 7515 2617 O 9764O 1167
11173
siteselected 2617
2091 1765
2225
Gimpo-Hangang Ab-7 1382
Gimpo-Yangchon 743 3028 437O 1382
O 3028743 437
Sales house Gimpo-Hangang Ab-1
Saleshouse 1167 2617 O 1167 2617
Wirye A2-11Gwanggyo-Edutown
1540
12 1764 6758 2613O 1540
O 6758
1764 2613
(10) (10)
Gimpo-Hangang Ab-7 1382
Wirye A2-2 3028
Gwanggyo-Edutown1413
13~15 1173 4661 O 2225O 1382
1413
O 4661
1173 3028
2225
Wirye A2-11 Namyangj
1540u-DasanGimpo-Hangang
B2 1186
Ab-1
6758 1167 2166 O 2617O 1186
O
1540 2166
1167 2617
6758
Namyangju-Dasan B4
Gimpo-Hangang 1615
Ab-7 1382 2938 3028X -O -1382 3028
Wirye A2-2 1413
Sales house 4661 O 1413 4661
Namyangju-Dasan S1Wirye A2-11 1685 1540 2902 6758O 1685
O 2902
1540 6758
Namyangju-Dasan B2 (10)
1186 2166 O 1186 2166
SubTotal Wirye A2-213,668 1413 30,345 9sites
4661selected 12,053
O 27,407
1413 4661
Namyangju-Dasan B4 1615
Total 2938
Namyangju-Dasan B2
21,183 1186 40,109 X 102166
sitesselected -O
14,144 1186
29,172 -
2166
Namyangju-Dasan S1 1685 Namyangju-Dasan
2902B4 1615 O 2938 X
1685 - -
2902
Namyangju-Dasan S1 1685 2902 O 1685 2902
Sub Total 13,668 30,345 9 sites selected 12,053 27,407
SubTotal 13,668 30,345 9sitesselected 12,053 27,407
Total 21,183 Total 40,109 21,183 40,109
10 sites selected 10sitesselected
14,144 14,144 29,172

As observed in Table 9, Constraint 1 is satisfied because total investment amount is 2,917,200

million KRW, which is less than 3,034,520 million KRW. Also, Constraint 2 is satisfied because only
Namyangju-Dasan B4 was excluded.
The result of the objective function (maximization of the number of suppled public rental houses)
is 2091. If GICO also includes Gwanggyo A19, the biggest remaining public rental house project, the
total investment amount would be 3,384,000 million KRW which violates Constraint 1 (≤3,034,500
million KRW).

5.2. Public Rental Housing Planning by Arbitrary Selection #2

GICO excludes Wirye A2-11 (whose investment amount was the biggest) to supply more public
rental houses. Then, GICO redistributes that investment amount of Wirye A2-11 (675,800 million KRW)
in order to maximize the number of selected houses. The result of arbitrary selection #2 is as shown in
Table 10.
As observed in Table 10, Constraint 1 is satisfied because total investment amount is 2,961,900
million KRW which is less than 3,034,520 million KRW. Also, Constraint 2 is satisfied because only
Wirye A2-11 is excluded.
The result of objective function (maximization of the number of suppled public rental houses)
is 5297. If GICO also includes Gwanggyo A11, the biggest remaining public rental house project,
 As observed in Table 9, Constraint 1 is satisfied because total investment amount is 2,917,200
million KRW, which2020,
Sustainability is less
12, xthan
FOR 3,034,520
PEER REVIEWmillion KRW. Also, Constraint 2 is satisfied because only 11 of 15
Namyangju-Dasan B4 was excluded.
The resultAs of observed
the objectivein Table 9, Constraint
function 1 is of
(maximization satisfied because
the number total investment
of suppled public rentalamount
houses) is
is 2,917,200
million
2091. If GICO also KRW,
includes which
Gwanggyois lessA19,
thanthe
3,034,520
biggest million
remainingKRW. Also,
public Constraint
rental 2 is satisfied
house project, because only
the total
investment Namyangju-Dasan
amount would beB4 million. KRW which violates Constraint 1 (≤3,034,500 million
was excluded
3,384,000
Sustainability 2020, 12, 600 KRW). The result of the objective function (maximization of the number of suppled public rental11 houses)
of 14 is
2091. If GICO also includes Gwanggyo A19, the biggest remaining public rental house project, the total
5.2. Publicinvestment
Rental Housingamount would
Planning bybe 3,384,000
Arbitrary million#2KRW which violates Constraint 1 (≤3,034,500 million
Selection
KRW).
total investment amountGICO would excludes Wirye A2-11 million
be 3,722,000 (whose investment
KRW, amountwhichwas the biggest)
violates to supply more
Constraint public
1 (≤3,034,500
rental houses. Then,Rental
5.2. Public GICOHousing
redistributes
Planningthat
by investment amount
Arbitrary Selection #2of Wirye A2-11 (675,800 million
million KRW). KRW) in order to maximize the number of selected houses. The result of arbitrary selection #2 is as
shown in TableGICO 10. excludes Wirye A2-11 (whose investment amount was the biggest) to supply more public
rental houses. Then, GICO redistributes that investment amount of Wirye A2-11 (675,800 million
Table 10. Result of Arbitrary Selection #2.
KRW) in order to maximize the
Table 10. number
Result of selected
of Arbitrary houses.
Selection #2. The result of arbitrary selection #2 is as
shown in Number
Table 10.of Investment Number of Investment
Name of Site Selection Number
Houses Amount (100m.) Investment Selected Houses InvestmentAmount (100m.)
of
Gwanggyo A10 Name of 701
Site Number Table
1196 of 10. Result
Houses of
Amount Arbitrary
O Selection
Selection #2.
701 Amount 1196
Selected
(100m.) (100m.)
Gwanggyo A11 637 1103 X Houses- Number -
Investment Investment
GwanggyoA10 701 1196 O 701 1196
of
Gwanggyo A16 224
Name of Site 374 Number of Houses X Amount Selection - -
Amount
GwanggyoA11 637 1103 X - Selected
-
Rental house Gwanggyo A19 1373 1212 O (100m.) 1373 Houses
(100m.)
1212
GwanggyoA16 224 374 X - -
(10) Gwanggyo A23 258 A19 GwanggyoA10431 701 1212 X 1196 O- 701 1196
-
Gwanggyo 1373 O 1373 1212
Gwanggyo A24 394 GwanggyoA11592 637 X 1103 X- - --
GwanggyoA23 258 431 X -
Rentalhouse GwanggyoA16 224 374 X - -
Gwanggyo A25 Gwanggyo
146 A24 141394 592 X X - - -
(10) GwanggyoA19 1373 1212 O 1373 1212
Gwanggyo A26 Gwanggyo
1132 A25 1859146 141 O X -
1132 - 1859
GwanggyoA23 258 431 X - -
Gwanggyo
Rental house A26 1132 1859 O 1132 1859
Gwanggyo A30 2091 GwanggyoA241765 394 O 592 2091
X - 1765
-
Gwanggyo
(10) A30 2091 1765 O 2091 1765
Gimpo Ab-2 559 GwanggyoA251091 146 X 141 X- - --
GimpoAb-2 559 1091 X - -
Sub Total Sub Total GwanggyoA269764
7515 7515 1132 9764 1859
4sites
4 sites selected selected O
5297 1132
6032 1859
6032
Gimpo-Yangchon GwanggyoA30 743 2091 437 1765O O
743 2091
437 1765
Gimpo-Yangchon 743 Gimpo Ab-2 437 559 O 1091 743
X - 437
-
Gwanggyo-Edutown12 1764 2613 O 1764 2613
Gwanggyo-Edutown 12 Gwanggyo-Edutown
1764 SubTotal 2613
13~15 1173 7515 2225O 9764O 4sites1764
selected
1173 5297
2225 6032
2613
1173 Gimpo-Yangchon
Gwanggyo-Edutown 13~15 Gimpo-Hangang Ab-1 2225
1167 743 2617O 437O O
1173
1167 743
2617 437
2225
Gwanggyo-Edutown12 1764 2613 O 1764 2613
Sales house Gimpo-Hangang Ab-1 Gimpo-Hangang
1167 Ab-7 1382
2617 3028 O O 1382
1167 3028 2617
Saleshouse Gwanggyo-Edutown13~15 1173 2225 O 1173 2225
(10) Gimpo-Hangang Ab-7 Wirye
1382A2-11 1540
3028 6758O X -
1382 - 3028
(10) Gimpo-Hangang Ab-1 1167 2617 O 1167 2617
Wirye A2-2 1413 4661 O 1413 4661
Wirye A2-11 1540 Gimpo-Hangang 6758
Ab-7 1382 X 3028 O- 1382 -
3028
Namyangju-Dasan
Saleshouse B2 1186 2166 O 1186 2166
Wirye A2-2 1413 Wirye A2-11 4661 1540 O 6758 1413
X - 4661
-
Namyangju-Dasan
(10) B4 1615 2938 O 1615 2938
Namyangju-Dasan B2 1186 Wirye A2-2 2166 1413 4661 O 1413 4661
Namyangju-Dasan S1 1685 2902O O 1186
1685 2902 2166
Namyangju-Dasan B4 1615 Namyangju-Dasan2938
B2 1186 2166 O 1186 2166
Sub Total 13,668 30,345O 9sitesselected 1615
12,128 23,587 2938
Namyangju-Dasan B4 1615 2938 O 1615 2938
Namyangju-Dasan S1 Total1685 21,183
2902 40,109O 13sitesselected 17,425
1685 29,619 2902
Namyangju-Dasan S1 1685 2902 O 1685 2902
Sub Total 13,668 30,345 9 sites selected 12,128 23,587
SubTotal
As observed in Table 10, Constraint 13,668because total
1 is satisfied 30,345investment
9sitesselected 12,128is 2,961,900
amount 23,587
Total million KRW which is21,183 Total 3,034,520
less than 40,109 21,183
million KRW.13 sites
Also, 40,109
selected
Constraint 132sites
isselected
17,425 17,425
satisfied because29,619
only
Wirye A2-11 is excluded.
The
Sustainability 2020, 12, As
result xof
FORobserved
objective in Table (maximization
function
PEER REVIEW 10, Constraintof1 the
is satisfied
number ofbecause
suppledtotal investment
public amount
rental houses)
12 ofis15 is 2,961,900
5297.
5.3. Public Rental Housing
If GICO million
Planning
also KRW
includes which is
Determined
Gwanggyo less
A11,by than
thethe 3,034,520
Branch
biggest million KRW.
andpublic
remaining Bound Also,
Method
rental Constraint
house project, 2total
is satisfied because only
investment
amount Wirye
The result
would A2-11
of the
be is excluded.
Branch
3,722,000and Bound
million KRW, whichisviolates
Method shownConstraint
in Table 11. As observed
1 (≤3,034,500 in Table
million 11,
KRW).
Constraint
The result of the Branch The result
1 is satisfied
and Bound of objective
because total function
investment
Method (maximization
amount
is shown is in of themillion
2,929,800
Table number of
11. KRW,
As suppled
whichpublic
observed rental
is less thanhouses)
in Tableis11,
5297.
3,034,520
5.3. PublicIfRental
millionGICO
KRW.alsoAlso,
includes
Housing Gwanggyo
Constraint
Planning 2 isA11, the
bybiggest
satisfied
Determined remaining
because
the Branch only public
Wirye
and Bound rental
A2-11
Method house project, total investment
is excluded.
Constraint 1 is satisfiedThebecauseamount
result
total
of objective
investment
wouldfunction
be 3,722,000
amountofisthe
million KRW,
(maximization
2,929,800
which
numberviolates
million
Constraint
of suppled
KRW,
public
whichmillion
1 (≤3,034,500
rental houses)
isisless than
KRW).
3,034,520 million KRW.
5187. Also, Constraint 2 is satisfied because only Wirye A2-11 is excluded.
5.3. Public Rental Housing Planning Determined by the Branch and Bound Method
Table 11. Result of Branch & Bound Method.
Table 11. Result of Branch & Bound Method.
Number
Investment Investment
Number of Investment Number
of of Investment
Name of Site Name of SiteHouses Number of Houses Selection
Amount Selection Amount
Amount (100m.) Selected Houses
Selected Amount (100m.)
(100m.) (100m.)
Gwanggyo A10 701 1196 O 701
Houses 1196
Gwanggyo A11 Gwanggyo A10
637 701
1103 1196 X O 701
- 1196 -
Gwanggyo A16 Gwanggyo A11
224 637
374 1103 O X -
224 - 374
Rental house Gwanggyo A19 Gwanggyo1373
A16 224
1212 374 O O 224
1373 374 1212
(10) Gwanggyo A23 Gwanggyo A19
258 1373
431 1212 O O 1373
258 1212 431
Gwanggyo A24 Gwanggyo A23
394 258
592 431 O O 258
394 431 592
Rental house
Gwanggyo A24 394 592 O 394 592
Gwanggyo
(10) A25 146 141 O 146 141
Gwanggyo A25 146 141 O 146 141
Gwanggyo A26 1132 1859 X - -
Gwanggyo A26 1132 1859 X - -
Gwanggyo A30 2091 1765 O 2091 1765
Gwanggyo A30 2091 1765 O 2091 1765
Gimpo Ab-2 559 1091 X - -
Gimpo Ab-2 559 1091 X - -
Sub Total Sub Total
7515 7515
9764 79764
sites selected 5187 5711 5711
Gimpo-Yangchon 743 437 O 743 437
Gwanggyo-Edutown 12 1764 2613 O 1764 2613
Gwanggyo-Edutown 13~15 1173 2225 O 1173 2225
Gimpo-Hangang Ab-1 1167 2617 O 1167 2617
Gimpo-Hangang Ab-7 1382 3028 O 1382 3028
Sales house
Wirye A2-11 1540 6758 X - -
(10)
Wirye A2-2 1413 4661 O 1413 4661
Namyangju-Dasan B2 1186 2166 O 1186 2166
Namyangju-Dasan B4 1615 2938 O 1615 2938
Namyangju-Dasan S1 1685 2902 O 1685 2902
Sub Total 13,668 30,345 9 sites selected 12,128 23,587
Total 21,183 29,298
 Selected
(100m.) (100m.)
Houses
Gwanggyo A10 701 1196 O 701 1196
Gwanggyo A11 637 1103 X - -
Gwanggyo A16 224 374 O 224 374
Gwanggyo A19 1373 1212 O 1373 1212
Sustainability 2020, 12, 600 12 of 14
Gwanggyo A23 258 431 O 258 431
Rental house
Gwanggyo A24 394 592 O 394 592
(10)
Gwanggyo A25 146 141 O 146 141
Table 11. Cont.
Gwanggyo A26 1132 1859 X - -
Gwanggyo
Number of A30 Investment 2091 1765 O
Number of 2091 1765
Investment
Name of Site Selection
Gimpo Ab-2 Amount (100m.)
Houses 559 1091 X Houses - Amount- (100m.)
Selected
Gimpo-Yangchon Sub Total
743 437 7515 O 9764 743 5187 5711
437
Gwanggyo-Edutown 12 Gimpo-Yangchon
1764 2613 743 O 437 O
1764 743 437
2613
Gwanggyo-Edutown 13~15 Gwanggyo-Edutown
1173 12 2225 1764 O 2613 O
1173 1764 2613
2225
Gimpo-Hangang Ab-1 Gwanggyo-Edutown
1167 13~15 2617 1173 O 2225 O
1167 1173 2225
2617
Sales house
(10) Gimpo-Hangang Ab-7 Gimpo-Hangang
1382 Ab-1 3028 1167 O 2617 O
1382 1167 2617
3028
Gimpo-Hangang Ab-7 1382 3028 O 1382 3028
Wirye A2-11Sales house 1540 6758 X - -
Wirye A2-11 1540 6758 X - -
Wirye A2-2 (10) 1413 4661 O 1413 4661
Wirye A2-2 1413 4661 O 1413 4661
Namyangju-Dasan B2 1186 2166 O 1186 2166
Namyangju-Dasan B2 1186 2166 O 1186 2166
Namyangju-Dasan B4 1615 2938 O 1615 2938
Namyangju-Dasan B4 1615 2938 O 1615 2938
Namyangju-Dasan S1 1685 2902 O 1685 2902
Namyangju-Dasan S1 1685 2902 O 1685 2902
Sub Total 13,668 30,345 9 sites selected 12,128 23,587
Sub Total 13,668 30,345 9 sites selected 12,128 23,587
Total Total
21,183 40,109 21,183 16 sites selected 17,315 29,298

The result ofSustainability

objective 2020,function
12, x FOR PEER (maximization
REVIEW of the number of suppled public 13rental
of 15 houses)

is 5187. Sustainability 2020, 12, x FOR PEER REVIEW 13 of 15

5.4. Public Rental Housing Planning by Genetic Algorithm
The result
5.4. Public Rental Housing of theRental
Planning
5.4. Public Genetic Algorithm
by Genetic
Housing is shown
Algorithm
Planning in Table
by Genetic 12. As observed in Table 12, Constraint 1
Algorithm
is satisfied because total investment amount is 3,025,900 million KRW which is less than 3,034,520
The result of the Genetic Algorithm is shown in Table 12. As observed in Table 12, Constraint 1
The result ofmillion KRW. Also,
the Genetic Constraint 2 is
Algorithm
is satisfied issatisfied
because total shownbecause
investment
only Wirye
inamount
Table is 12.
A2-11
As
3,025,900
is excluded. Table 12, Constraint
observed
million KRWin which is less than 3,034,520
The result of objective function (maximization of the number of suppled public rental houses) is
1 is satisfied because
5773.
totalmillion
investment
KRW. Also, amount
Constraintis2 3,025,900 million
is satisfied because onlyKRW which
Wirye A2-11 is less than 3,034,520
is excluded.
The result of objective function (maximization of the number of suppled public rental houses) is
million KRW. Also, Constraint 2 is satisfied because only Wirye A2-11 is excluded.
5773. Table 12. Result of the Genetic Algorithm.

Table 12. Result ofTable

the Genetic Algorithm.
12. Result of the Genetic Algorithm. Investm
Number
Investment ent
of Investm
Name of Site Number of Number of Houses Amount Selection Number ofAmoun
Investment NumberInvestment
Name of Site Selection
Investment Selected ent(100m.)
Houses Amount (100m.) (100m.) Selected Houses t of Amount
Name of Site Number of Houses Amount Selection Houses Amoun
Gwanggyo A10 701 1196 X - (100m.)
Selected -
(100m.) t
Gwanggyo A11 Gwanggyo A10 637 701
1103 1196 O X -
637 -
Houses 1103
(100m.)
Gwanggyo A16 Gwanggyo A11 224
Gwanggyo A10
637
374 701
1103 X
1196
O 637
X-
1103
- --
Rental house Gwanggyo A19 Gwanggyo1373 A16
Gwanggyo A11 1212
224
637
374 O
1103
X -
1373
O
-
637 1212
1103
(10) Gwanggyo A23
Gwanggyo A19
258
1373
431
1212 X O 1373 1212
Gwanggyo A16 224 374 X- - --
Gwanggyo A23 258 431 X - -
Gwanggyo A24
Rental house 394
Gwanggyo A19 592 1373 O 1212 394
O 1373 592
1212
Gwanggyo A24 394 592 O 394 592
(10) A25
Gwanggyo Gwanggyo A23
146 141 258 O 431 X
146 - 141-
Rental house A25
Gwanggyo 146 141 O 146 141
Gwanggyo A26 Gwanggyo
1132 A24 1859 394 O 592 O
1132 394 592
1859
(10)
Gwanggyo A26 1132 1859 O 1132 1859
Gwanggyo A30 Gwanggyo A25 1765
2091 146 X 141 O- 146 141-
Gwanggyo A30 2091 1765 X - -
Gimpo Ab-2 Gwanggyo A26 1091
559 1132 X 1859 O- 1132 1859
-
Gimpo Ab-2 559 1091 X - -
Gwanggyo A30 2091 1765 X - -
Sub Total Sub Total
7515 7515
9764 59764
sites selected 5773 6672 6672
Gimpo Ab-2 559 1091 X - -
Gimpo-Yangchon 743 437 O 743 437
Gimpo-Yangchon 743 Sub Total 437 7515 O 9764 743 5773 6672
437
Gwanggyo-Edutown 12 1764 2613 O 1764 2613
Gwanggyo-Edutown 12 Gimpo-Yangchon 2613
1764 743 O 437 O
1764 743 437
2613
Gwanggyo-Edutown 13~15 1173 2225 O 1173 2225
Gwanggyo-Edutown 13~15 Gwanggyo-Edutown
1173 122225 1764 O 2613 O
1173 1764 2613
2225
Gimpo-Hangang Ab-1 1167 2617 O 1167 2617
Sales house Gimpo-Hangang Ab-1 Gwanggyo-Edutown
1167 13~152617 1173 O 2225 O
1167 1173 2225
2617
Gimpo-Hangang Ab-7 1382 3028 O 1382 3028
(10) Sales house Ab-7
Gimpo-Hangang Gimpo-Hangang
1382 Ab-13028 1167 O 2617 O
1382 1167 2617
3028
Wirye A2-11 1540 6758 X - -
Wirye(10)
A2-11 Sales house
Gimpo-Hangang
1540
Ab-76758 1382 3028 O 1382 3028
Wirye A2-2 1413 4661 X O -
1413 4661 -
Wirye A2-11 1540 6758 X - -
Wirye A2-2 Namyangju-Dasan
(10) 1413B2 4661
1186 2166 O O 1413
1186 2166 4661
Wirye A2-2 1413 4661 O 1413 4661
Namyangju-DasanNamyangju-Dasan
B2 1186B4 2166
1615 2938 O O 1186
1615 2938 2166
Namyangju-Dasan B2 1186 2166 O 1186 2166
Namyangju-Dasan Namyangju-Dasan
B4 1615 S1 2938
1685 2902 O O 1615
1685 2902 2938
Namyangju-Dasan B4 1615 2938 O 1615 2938
Namyangju-Dasan S1 Sub Total 1685 2902
13,668 30,345 O 9 sites selected 12,128 1685 23,587 2902
Namyangju-Dasan S1 1685 2902 O 1685 2902
Sub Total Total 13,668 21,183
30,345 940,109 14 sites selected 12,128
sites selected 17,901 30,259 23,587
Sub Total 13,668 30,345 9 sites selected 12,128 23,587
Total Total
21,183 40,109 21,18314 sites selected
40,109 14 sites selected 17,901
17,901 30,259
Table 13 is the comparison of each method. The result from the genetic algorithm is superior to
those from arbitrary selection #1 and #2. Also, the result of the branch the bound method is not better
Table 13 is the comparison of each method. The result from the genetic algorithm is superior to
than that of arbitrary selection #2.
those from arbitrary selection #1 and #2. Also, the result of the branch the bound method is not better
The result of objective function (maximization of the number of suppled public rental houses)
than that of arbitrary selection #2.
is 5773.
Sustainability 2020, 12, 600 13 of 14

Table 13 is the comparison of each method. The result from the genetic algorithm is superior to
those from arbitrary selection #1 and #2. Also, the result of the branch the bound method is not better
than that of arbitrary selection #2.

Table 13. Comparison of the Supplied Number of Public Rental Houses.

Arbitrary Arbitrary Branch & Genetic

Method
Selection #1 Selection #2 Bound Method Algorithm
Number of Public Rental
2091 5297 5187 5773
Houses

6. Conclusions
This study reviewed the optimal land development planning model and optimal urban
regeneration planning model in South Korea. Then, it proposed an optimal project selection model to
maximize the number of total supplied public rental houses with real-world project data.
There is a trade-off between the investment profit and investment amount needed to supply
public rental houses. We applied a couple of optimization techniques such as the genetic algorithm
and the branch and bound method to this combinatorial problem. The genetic algorithm obtained a
superior result to those from arbitrary selections or the branch and bound method.
We think that this optimization model is a useful and practical planning tool for real estate
investment projects while meeting various constraints including budget limitations, regional balance,
and profit and welfare balance. Because real estate projects have no divisibility, we must decide whether
or not to select any specific project. The genetic algorithm and branch and bound methods are useful
tools for this kind of discrete optimization problems in real estate investment. Our optimization model
may be applied to government-level infrastructure development plan in all over the country. With a
limited budget, governments would select infrastructure (e.g., expressways, high-speed rail, facilities
for disaster prevention, etc.) development projects which have different project effect, investment
amount, and project location.
The model also can be applied to financial investment decisions with different returns of investment
and risk among lots of bond, stock, commodities like gold or real estate. Investors would find an
optimal investment portfolio obtaining objective profits under affordable risks with this model. The
model saves considerable enumeration time with the trial and error method and proposes a reasonable
basis for decisions.
Our research was limited by the amount of data available, thus we could not do a more detailed
comparison between the various methods. If more data becomes available to us in the future, we can
revisit this study and provide more precise comparisons between the different methods.

Author Contributions: J.H.P. proposed the idea, performed computation, and wrote the paper. J.-S.Y. supervised
the research on real estate investment. Z.W.G. supervised the research on optimization formulation and algorithms.
All authors have read and agreed to the published version of the manuscript.
Funding: This research was supported by the Energy Cloud R&D Program through the National Research
Foundation of Korea (NRF) funded by the Ministry of Science, ICT (2019M3F2A1073164).
Conflicts of Interest: The authors declare no conflict of interest.

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