Tag: real estate

Considering the high housing prices Koreans are facing in Seoul, preventing foreigners from buying investment properties may help a little, but probably not much:

The government is facing growing calls to curb the purchases of homes in Korea by foreign nationals, who could obtain mortgage loans from banks abroad and are subject to less stringent borrowing regulations than Koreans.

Some are even demanding restrictions as a reciprocal measure against countries where foreigners, including Koreans, are restricted from owning homes.

As of July 2023, foreigners accounted for 1.4 percent of total home purchases here. While this percentage may seem modest, it has been steadily increasing from 1 percent in 2021 to 1.2 percent in 2022. Also, fierce competition to buy homes in the crowded capital, where real estate prices have been escalating rapidly, has amplified the concerns of local residents regarding foreigners buying homes in Seoul under more favorable conditions.

Korea Times

You can read more at the link.

According to the article Chinese nationals make up 56% of the suspicious property transactions currently being investigated. Americans make up 21%, Taiwanese 8%, and Canadians 6.6% of the additional suspicious real estate cases:

A view of apartment complexes seen in Jamsil in southern Seoul [YONHAP]

The Korean government detected over 400 suspicious land transactions made by foreigners between 2017 and 2022, with more than half of the cases linked with Chinese nationals.    
   
The Ministry of Land, Infrastructure and Transport reported 437 land acquisitions deemed illegal to related investigation agencies following its large-scale nationwide investigation conducted from February through to June. Out of a total of 14,938 foreign land transactions between 2017 and 2022, the investigation then focused on 920 suspicious cases, in which individuals involved were asked to provide supporting documents for further examination.  (…..)

The investigation identified various violations, with the most common being the manipulation of reported transaction amounts and contract dates, with 419 cases of misreported contracts. Additionally, 61 cases were suspected of tax evasion through expedient gifting, and 35 cases raised suspicions of illegally imported funds from overseas.  

Joong Ang Ilbo

You can read more at the link.

Chinese nationals have apparently been investing heavily in Korean real estate:

Chinese people account for over 54 percent of homes owned by foreigners in Korea, while Americans account for 24 percent of them, according to the land ministry’s latest data on foreign ownership of land and housing in Korea. 

Data revealed by the Ministry of Land, Infrastructure and Transport, Wednesday, show foreign nationals own 83,512 homes in Korea as of the end of last year, accounting for 0.4 percent of all residential property in the country.

This is the first time that statistics on homes owned by foreigners have been officially announced by the government. So far, the land ministry had been announcing statistics on a regular basis on foreign land ownership, but not the number of homes in the country owned by foreigners. The disclosure of the data is ascribed to the Yoon administration’s pledge to regulate foreigners’ speculative housing transactions. 

By category, 91 percent of the homes owned by foreigners are in multi-complex housing, such as apartments, while the other 9 percent are single-family detached houses.

Korea Times

You can read more at the link, but this makes me wonder how many of these Chinese owned apartments are actually occupied or are they just sitting empty waiting to appreciate and be sold again?

This is the first time I have read of a direct accusation against Lee Jae-myung from someone directly involved with the Daejang-dong real estate investment scandal:

Lawyer Nam Wook, a key figure in the Daejang-dong development corruption scandal, is surrounded by reporters as he walks to his trial at the Seoul Central District Court in Seocho District, southern Seoul on Monday. [YONHAP]

A key figure in the Daejang-dong corruption scandal said Monday he heard that Democratic Party (DP) leader Lee Jae-myung held a hidden stake through one of the investors in the project.  
   
Lawyer Nam Wook made the allegation at his trial on the Daejang-dong case at the Seoul Central District Court, hours after he was released from jail at midnight Sunday after his detention period expired. Nam is charged with breach of trust and bribery in the case.  
   
His case is believed by prosecutors to be part of a larger conspiracy concerning astronomical profits raked in by Hwacheon Daeyu, a previously obscure asset management company, and its Cheonhwa Dongin affiliates, from minuscule investments in a 2015 real estate development project in the Daejang-dong area of Seongnam, Gyeonggi, as well as suspicions about their true ownership. 

Joong Ang Ilbo

You can read more at the link.

Look who wants to start a real estate corruption agency, the person accused of being involved in a massive real estate scandal:

Lee Jae-myung, the presidential nominee of the ruling Democratic Party, has said that, if elected, he will launch a real estate supervisory service in an effort to root out corruption in the property market.

Lee made the remark during an interview with Yonhap News Agency on Friday, saying he would give the service powers to conduct investigations into any irregularities that arise in the real estate market.

The pledge comes as Lee has been accused of involvement in a massive corruption scandal surrounding an apartment development project undertaken in Seongnam, south of Seoul, in 2015 when he was the city’s mayor.

“We have to create a real estate supervisory service with actual powers to wield investigative authority and investigate every day,” Lee told Yonhap at a hotel in Seongnam.

Yonhap

This is what people in Korea should probably be concerned about:

 If the envisioned supervisory service is launched, he said it will look into irregularities, such as speculative purchases of farmland, and force the sales of plots that are not being used for farming.

So if you have a plot of land you are holding on to for whatever reason Lee will make you sell it. If elected people better hurry up and put a hobby garden on whatever land they own.

This just shows how touchy of an issue real estate is in Korea; that mostly this one issue has caused the ruling party to quickly slide in public polling:

081401-Poll-Graph

For the first time since the 2016 political scandal that led to President Park Geun-hye’s removal from office, the approval rating of the United Future Party (UFP) overtook that of President Moon Jae-in’s Democratic Party (DP), a poll showed Thursday.  
   
According to a Realmeter poll conducted earlier this week, 36.5 percent of respondents said they support the UFP, up by 1.9 percentage points from the previous week. That figure was the highest since the party was rebranded in February.  
   
In the same survey conducted from Monday through Wednesday on 1,507 adults nationwide, the DP’s approval rate was 33.4 percent, down by 1.7 percentage points.  
   
It was the first time the UFP outstripped the DP in Realmeter’s weekly approval rating poll since October 2016.   

Joong Ang Ilbo

You can read more at the link, but the Korean public is upset about the government’s efforts to manipulate the real estate market while many government officials to include President Moon are being accused of hypocrisy and benefitting from real estate speculation.

This plan would be disastrous to the various parks and green space around Seoul if approved:

South Korea is considering opening up greenbelt zones in the Seoul metropolitan area to make more land available for housing as part of efforts to help resolve the country’s housing supply shortage in the densely populated area, the transport ministry said Wednesday. 

The Ministry of Land, Infrastructure and Transport said it has formed a task force with the Ministry of Economy and Finance and the Seoul city, Gyeonggi and Incheon regional governments to discuss ways to supply more homes in the capital city and adjacent areas. 

In less than a week, the government has changed its stance toward easing the construction ban in the development restriction areas designated by the country to resolve housing shortage problems.

Yonhap

You can read more at the link, but does anyone still think all of Yongsan Garrison will become a park?

Here is what the Korean government plans to do to try and drop real estate prices in Seoul:

The government is facing a severe public backlash following the announcement of its latest measures to curb rising real estate prices in Seoul, which many experts claim skew toward demand-side regulations.

The experts said the government should consider supplying more homes in Seoul’s affluent areas, describing the lopsided policies focusing on taxes and loan control as a violation of free market principles. 

The set of rules announced Monday includes raising property taxes on multiple homeowners, banning mortgage lending on properties worth over 1.5 billion won ($1.3 million) and driving down the requirement for the loan-to-value ratio from 40 percent to 20 percent on those valued at 900 million won or higher but less than 1.5 billion won.

While legal and economic experts defined the regulations as unconstitutional and anti-market approaches, progressive civic groups claimed the policies are not effective enough to achieve their intended goals.

Korea Times

You can read more at the link, but as long as supply of housing is low in the central Seoul area and demand is high, the prices will continue to increase. Here is what the Seoul Mayor wants to do:

He also criticized Seoul Mayor Park Won-soon for his remarks that the government should triple the comprehensive real estate holding tax and the ownership of real estate should be shared among citizens.

So if real estate is shared among citizens does that mean that people can just walk into Lee Myung-hee’s home, that is considered the most expensive in Seoul, and hang out?

This is all for show because all these people have to do is transfer the real estate to their spouse or other family member. Additionally this does nothing to stop the insider real estate speculation going on by Moon administration allies that don’t work in the Blue House:

The Blue House ordered its high-ranking staff to sell any real estate they weren’t living in.

The announcement, released Monday by Blue House Chief of Staff Noh Young-min, is part of the government’s campaign to cool down real estate prices. 

“Chief of Staff Noh has stressed the need of Blue House high-ranking officials to lead by example,” said Yoon Do-han, Blue House senior secretary for public communication.  

The measure came as more former Blue House staff and top government officials have been accused of real estate profiteering, a cardinal sin for a liberal administration in Korea.  

The civic group Citizens’ Coalition for Economic Justice on Monday claimed that the value of properties owned by officials from the current Blue House has risen an average 300 million won ($256,000) in the last three years.  

The civic group claimed that the value of apartments and “officetels” (units in buildings used for both commercial and residential purposes) owned by 65 incumbent and former Blue House staffers as of January 2017 was valued at 820 million won on average, which rose roughly 40 percent to 1.14 billion won as of last month. 

Joong Ang Ilbo

You can read more at the link.