Rocketing prices? Chinese property speculators hope for peace premium as they move in on North Korea
Prices also rise by up to 50 per cent in parts of Dandong, China’s gateway to the hermit kingdom
Chinese property speculators are starting to bet on a rapid improvement in relations between North Korea and the rest of the world, pushing up prices in the border city of Dandong and even spurring buying interest in the world’s most isolated country.
Last week, online Chinese real estate investment platform Uoolu.com released a guide for Chinese buyers interested in North Korean real estate, while popular accounts on the mobile messaging app WeChat have been posting articles about the country’s housing market in recent weeks.
“Recently we’ve had many inquiries about investing in North Korea’s property market,” said Huang Xiaodan, founder and CEO of Uoolu.com, which specialises in helping Chinese buy property overseas.
Actual cross-border investment has yet to materialise.
“Venturing into a new frontier requires policy support and time to cultivate the market,” said Huang. “At the moment, we’re just paying close attention to what’s going on.”
North Korea has long been largely shut to foreign investors, an isolation that deepened when the United Nations ratcheted up sanctions last year in an effort to curb its development of nuclear weapons.
But a dramatic improvement in relations between Pyongyang and China, with a secretive Beijing visit by the North Korean leader Kim Jong-un in late March, followed by last week’s historic inter-Korean summit and an upcoming meeting between Kim and US President Donald Trump, has caught the notice of some opportunistic investors.
“I’ve had several inquiries from Chinese interested in purchasing properties in Pyongyang, Wonsan and Sinuiju,” said the founder of INDPRK, a travel company in Dandong that runs tours to North Korea, who goes by the name Griffin Che.
“There are a lot of speculators on the market right now but, at the moment, only locals can buy property in North Korea.”
There are no such restrictions in Dandong, the main gateway into North Korea in northeastern China, where listed prices of apartments in some projects seen as most likely to gain from an economic opening up of North Korea have jumped by as much as 50 per cent since Kim’s Beijing visit in late March, according to five real property agents and three local residents.
“Rising property prices are due to North Korea,” an official in Dandong’s real estate registration office, who only gave his surname Zhao, told Reuters.
The Dandong New Zone – which was planned in anticipation of the opening of the New Yalu River Bridge connecting Dandong with Sinuiju in North Korea – has been attracting the most interest from prospective buyers. The dual-carriageway bridge was slated to open in November 2015 but today sits abandoned.
“We’re all hopeful the bridge will open soon,” said Zhao Bin, a Chinese trader who does business with North Korea and considered buying property in Dandong last week.
Che, who has a prominent social media presence, said Dandong New Zone transaction prices had risen from about 4,000 yuan (US$630) per square metre to 5,500 to 6,000 yuan, which he attributes to the improving situation on the Korean peninsula. He warned that Dandong prices were so frothy they may have even peaked.
“I was keen to buy but I think it’s too late now,” he said.
Around one-third of buyers over the recent Labour Day weekend holiday were from out of town, taking advantage of time off to scout properties, according an agent at Gold Key Real Estate in Dandong, surnamed Liao, whereas locals made up the vast majority of buyers in much of April.
Sales of residential properties rose almost 30 per cent in Dandong’s of Zhenxing District, which includes the New Zone, last month, according to data from the local housing authority. A total of 967 apartments were sold in April, it posted on the official website.
Average home prices in Dandong rose nearly 1 per cent month-on-month in April, according to data from the China Real Estate Association, compared with a 0.5 per cent decline in the same period a year earlier, although citywide averages tend not to fully reflect big price fluctuations in individual projects.
Dandong’s real estate registration office released a statement last week saying it was unable to keep up with the sudden rise in people registering apartments so people needed to make an appointment to visit the office ahead of time, according to state-owned Securities Times newspaper.
A woman answering the phone at Dandong’s real estate registration office said the new system was not connected to North Korea, but because several projects had recently been completed so more people were purchasing apartments.