Chinese Investors Buy Up Real Estate in Seoul

Chinese lanterns hang outside at a restaurant in Yeonnam-dong, Seoul on Oct. 7.

Chinese property investors are turning their sights on Seoul after swarming the southern resort island of Jeju.

According to Seoul city officials on Wednesday, Chinese nationals own 4,139 lots or a combined 171,614 sq.m in Seoul as of end-June this year, nearly double in terms of the number of lots from two years ago and up nearly one-third in square meters. Over the same period, real estate owned by U.S. citizens rose just one percent and by Japanese 3.4 percent.

Chinese investors traditionally bought real estate in Daelim-dong in southern Seoul and Yeonnam-dong in the western part of the capital, which are home to large Chinese minorities.

But now they are buying up real estate on Yeongjong Island and Songdo in Incheon, as well as the affluent Gangnam district of southern Seoul.

Ten Chinese families live in W1.3-billion condominiums in a high-riser in Hapjeong-dong near the trendy Hongik University neighborhood, while other Chinese investors have bought land and buildings Gangnam and Seocho (US$=W1,138).

According to Seoul city, some 120 properties in Gangnam are Chinese-owned. Investors are apparently drawn by the facilities of the capital and the proximity to China, some with an eye to owning second homes or renting to other Chinese nationals.

There are fears that the trend will drive real estate prices up even further. Jeju Island has seen the price of real estate surge 28 percent last year alone as Chinese and Koreans snap up real estate there. The steep rise makes it more expensive for others to find homes on the southern resort island.

Sydney, Australia and Vancouver, Canada experienced similar headaches after Chinese investors snapped up real estate. But others believe property prices in Korea will not overheat because the market is relatively small and investors are wary of tension with Pyongyang.

Shim Gyo-eon at Konkuk University said, "Increased investment in real estate by Chinese people could balance out dwindling demand here due to an aging society compounded by a low birthrate".