Monday 23 September 2019

North Korea's Kim Jong Un pushing up property prices in Chinese city as he embraces peace

North Korean leader Kim Jong Un
North Korean leader Kim Jong Un

Emma Dong

A city on the North Korea border has suddenly become China's new hot property market, as Kim Jong Un's embrace of peace sparks a buying frenzy.

New home sales in Dandong, which sits across the Yalu River from North Korea and is the centre of trade between the two countries, surged to an eight-year high of 320,000 sq m in March, when US President Donald Trump announced he'd grant an unprecedented meeting to Kim, who then made a surprise visit to Beijing.

Sales stayed strong at 290,000 sq m in April, according to data from China Real Estate Information Corp, as Kim made an historic first visit by a North Korean leader to South Korea, and pledged to end his nuclear weapons programme, which may lead to the lifting of crippling economic sanctions.

"Two Koreas shake hands, and Dandong rises!" blares the slogan at Zhao Ziye's real estate agency in the border town, where TV screens replay footage of Kim's visit to Beijing - his first known trip abroad since taking power in 2011. Business is so brisk that Zhao says she's trying to hire five more estate agents.

Any economic opening by North Korea could benefit the frontier city of 2.4 million people, situated 840km from Beijing and 160km from Pyongyang.

Much of the trade between the two nations - both legal and illegal - flows through Dandong.

In response to the surging property demand, developers have raised prices by more than 50pc at some new residential complexes in Dandong New District - a 127 sq km area built from scratch as a China-North Korea trading hub - according to Cushman & Wakefield Inc.

"Most buyers in Dandong New District are speculators," said Jason Cheung, general manager at Cushman & Wakefield who oversees the realtor's business in nearby Dalian and Shenyang.

"This is the root cause of the rocketing rise of home prices there."

While no official data are available showing how much the city's house prices have climbed since North Korea's newfound rapprochement, Dandong has historically been a laggard.

Prices rose 4.1pc in March from a year earlier, below the average 6.8pc gain among similar-sized cities.

The rush of demand illustrates the challenge for Chinese officials seeking to tame house-price bubbles without tanking the entire economy.

After imposing buying restrictions in large cities such as Beijing and Shanghai, the government has turned to smaller cities and provinces that have become popular with buyers. (Bloomberg)

Sunday Independent

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