(Yicai Global) May 18 -- In a recent field visit to the South Korean area along the border region between South Korea and North Korea, Yicai Global found that local real estate transactions gained traction fast, even in the "development-forbidden" lands, shortly after leaders of the two countries signed an agreement in the truce village of Panmunjom in late April this year as they seek peace of the Korean Peninsula.
A north-bound journey of one hour starting from Seoul Station along the Gyeongui rail line leads us to the Munsan Station in Paju-si, Gyeonggi-do. About 60 kilometers away from downtown Seoul, Munsan Station comes as the northernmost tip of the "Gyeongui line", one of the three railways that have so far connected South Korea with North Korea; with a 10-km drive north of the station, we will be near to the territory of North Korea.
Public data shows that Munsan-eup, the largest one in terms of both size and population number among all South Korean towns along the boundary between the two countries, has a population of 50,000 or so.
In the north of the town lies "Imjingak" resort,located only seven kilometers away from the military demarcation line. Standing opposite is a memorial altar called Mangbaedan, which was established in the old days for the families divided by the Korean War.
Later, the resort gradually carried more symbolic implication as the Gyeongui rail line connecting Seoul and the North Korean city Sinuiju passed it.
Within half a month following the meeting of the leaders of North and South Korea, the resort witnessed a nearly 60-percent increase in tourist numbers compared with the same period last year. A multitude of stores in the resort used to be closed during working days have been made available to tourists every day for their convenience, an office worker in the Imjingak resort Choe Jinhui (Transliteration) recently told Yicai Global.
Yicai Global noticed that the parking lot was almost packed with cars although the day of interview was a working day. Hordes of South Koreans there were shouting slogans like "We aspire for unification", holding the "Peninsula flag" in their hands representing national reconciliation between the two countries.
Yicai Global also interviewed a retired female worker called Younghee Kim (Transliteration) from Busan of South Korea. She, together with several fellow workers, set out in the morning and came to Imjingak very early.
"The talks between the pair rekindled the hope of many people for peace and prosperity in the Korean Peninsula." Younghee told Yicai Global, "it is no exaggeration to say that their (Moon Jae-in and Kim Jong-un) handshaking is by no means an ordinary one, but one after "a 10-year hiatus" (the last time when heads of the two countries held talks was 2007)."
"I hope that the light of peace triggered by the meeting of the two leaders would go beyond it and be expanded by us to become brighter light that will benefit our generation and future generations; I also wish to have the chance to take the inter-Korean train to go to Pyongyang and eat the Pyongyang cold noodles," Younghee replied when asked about her future aspirations.
Those sharp-nosed real estate practitioners have already been hunting for business opportunities from people's expectation for peace. In the car from Munsan Station to Imjingak, Yicai Global found many placards hanging on both sides of the road that read "Land" or "Land for Sell". Within the mere five-kilometer road, there were as many as ten placards of real estate agencies found.
Cho Byengwug (transliteration), who has been serving as a real estate agent for 15 years, told Yicai Global, Munsan-eup now is embracing the second craze for real estate, which is more drastic than last time, even "mad".
"Though Munsan is only 50 kilometers away from Seoul, impacted by the instability of inter-Korea relations, this place had attracted little interest of migrants except some permanent residents. As a result of factors like military and economic matters, the economy of border cities lagged far behind surrounding cities with the same condition, and Munsan was no exception," said he.
Nevertheless, such situation turned around after leaders of the two Koreas met in 2007. At that time, Paju-si, which Munsan belongs to, began to call itself the "Backyard of Seoul", building up several large-scale residential areas in Munsan. Furthermore, Paju also established multiple industrial parks in the surrounding area of Munsan, where many South Korean enterprises have been located including LG Display , a liquid crystal display panel manufacturer. By doing so, Munsan Station also turned into a large-scale station featuring an annual passenger traffic of five million person-times.
Nevertheless, the second real estate craze in Munsan is not led by apartments any longer, but land around the inter-Korean border.
Per the statistics, April saw 4,628 land transaction deals done in Paju, up four folds from the same period last year, which hit a new high since 2006 when South Korea began to disclose relevant statistics. In particular, the number of transactions in towns contiguous to the border was up by near seven folds year on year.
The area that is on the north of the Civilian Control Line (CCL) with restrictions on the free access, embraced 64 deals after the seven-month blank. "Taking my agency as an example, we have already fulfilled our sales expectation that would have costed three to four years since the beginning of April when the news about the upcoming inter-Korea negotiations came out," told Cho.
The transaction price is even a stronger manifestation for the "real estate craze". The statistics offered by the Ministry of Land, Infrastructure and Transport of South Korea tell that, the transaction price in areas around CCL has risen to KRW300,000-400,000 per pyeong (around 3.3 square meters) from KRW50,000-80,000 in the beginning of 2018. Furthermore, areas around the Unification Bridge, one of the main inter-Korea roads even saw the price rocket to around KRW600,000 per pyeong.
"Given the fact that people may declare their transactions within 60 days after paying land purchasing expenses, current statistics only represent a tip of the iceberg. The number afterwards will be crazier," Cho held the opinion.
Nevertheless, your great wealth will not necessarily enable you to get the land around the inter-Korea border.
An old couple driving here from Seoul encountered by Yicai Global in a real estate agency said, they have retired and prepared their land-purchase budget as within KRW100 million. "We have visited five agencies today and checked several plots of land, but were told no land meets our budget. If we cannot find a proper plot here, we have to go home then."
Cho said, "The success of leaders' meeting and the expectation to revive the Kaesong Industrial Park brought many out-of-town real estate agents to Munsan. I heard some of them have organized the so-called "real estate speculator groups"."
"The most worrisome is the vulnerability of the current wave of land investment," a staff member of another intermediary near the Munsan Station said to the reporter frankly. "The North-South relations are now just showing signs of warming, with the possibility of change at any time. In particular, within the CCL, any development other than for agricultural purpose is prohibited under the relevant law. Isn't this kind of investment rush a little too soon?"
During the interview of nearly 20 minutes, the real estate intermediary that Cho works for received nearly 10 calls to consult on investment and reached two investment intentions on the phone. "Some people, after hearing that there is land for sale, did not even take a look at the land. They paid the deposit only after a glimpse at the satellite map. "
Yicai Global noted that a "shantytown" project opposite the Munsan Station was delayed for years before an agreement was inked at the end of April.
During the inter-Korean leaders' meeting, South Korean President Moon Jae-in personally handed over to North Korean supreme leader Kim Jong-un a U disk containing information on the new economic concept of the Korean Peninsula, revealed a key source at South Korea's Blue House. It includes proposals to expand North Korea's power infrastructure, link railways and roads between South Korea and North Korea, and develop North Korea's west coast economic belt.
South Korea and North Korea will work together to promote the projects in previous agreements and agree to first connect and upgrade the East China Sea Line and the Gyeongui Line railways and roads, says the Panmunjom Declaration for Peace, Prosperity and Unification of the Korean Peninsula.
Among the current three railways connecting South Korea and North Korea, Gyeongui Line connects Seoul, Kaesong, Pyongyang, Sinuiju and other major cities between South Korea and North Korea, and links with Chinese railways in the form of international trains, so it is considered by South Korean experts to be the most important transportation route.
"The inter-Korean section of the line was officially connected in June 2003 and was put into operation in 2007, so it is only necessary to maintain and improve part of the aging railways. The estimated cost is about KRW 100 billion to 200 billion," a staff member of the "Inter-Korean Affairs Service", a unit in charge of the inter-Korean railway link newly established by South Korean railway company KORAIL, told Yicai Global. "Compared with the other two lines that need to be reconnected, it will cost less with the most additional effects."
"If the subsequent talks go smoothly and create an atmosphere of inter-Korean cooperation, economic and trade exchanges between the two Koreas are likely to begin with the connection of railways and other transport infrastructure," he said.
If Gyeongui Line resumes operation successfully and is connected to Chinese railways, it is expected to increase cargo volume by 30.15 million tons a year, and will completely free South Korea from the constraints of the "island economy" and create a turning point for South Korea to move towards a continental economy, the Korea Research Institute for Human Settlements (KRIHS) estimates.
The inter-Korean rail link will also push the gross domestic product (GDP) of Liaoning, Jilin and Heilongjiang provinces in northeast China to grow by 54.6 percent by 2020, thus creating a win-win situation for the region, the study believes.
In addition, the railway link will not only strengthen inter-Korean economic cooperation and effectively reduce logistics costs, but will also be able to link up with China's "Belt and Road" initiative and the strategy of "revitalizing the old industrial base in northeast China", and accelerate the landing of the Rajin-Khasan Project Russia is proceeding with, the study report says.
Prof. Lee Gukheon (Transliteration) of College of Political Science and Economics of Korea University said that from the perspective of economy and trade, it is worth recognizing the meeting between South and North Korean leaders. "This meeting will greatly improve the external environment of South Korea's capital market, South Korea and relevant regions, which will help promote the process of economic integration in Northeast Asia."
"North Korea's infrastructure is still relatively weak. The in-depth economic cooperation will strongly boost the development of South Korea's infrastructure industry. Taking advantages of China's 'Belt and Road' Initiative and the Asian Infrastructure Investment Bank (AIIB), the cooperation will provide a more stable and mutually beneficial environment for economy of China, South Korea and the region," Lee analyzed.
At present, the most northern station of Gyeongui Line in South Korea is Dorasan Station. However, as it is located in the CCL, the most northern station that common South Koreans can use is Imjingang Station next to the Imjingak.
Park Geonyang (Transliteration), head of Imjingang Station, has been working here for nearly four years. "Only two trains stop here per day; therefore, only four employees work here in three shifts. Although Imjingang Station is a small station currently, it is the first station of the inter-Korean Railway in South Korea," he introduced to Yicai Global
Park showed the photos posted by himself to Yicai Global, including one with a note saying "the iron horses long for running", which expresses the desire of South Korean railway staff to resume the operation of the North-South Korean Railway.
"Although I feel a little lonely to work here sometimes, I can get some hope when seeing tourists visiting here. After all, a great number of people long for the peace and prosperity in the peninsula. It will be the most fundamental cornerstone to promote the North-South Korean economic cooperation if the hopes of every North and South Korean people get together", said Park.
As the station-master and other staff insist, the "last stop" and "next stop" are written as "Seoul 52km" and "Pyongyang 209km", respectively, on the station board of Imjingang Station.
At the door of a supermarket in Munsan, Yicai Global met Kim Yeongsuk (Transliteration), a supermarket employee who lives there for 20 years, while she was hanging the slogan banner reading "our nation coordinates efforts to head for peace and prosperity."
Kim told Yicai Global that the North-South Korea economic cooperation will provide tremendous opportunities for her hometown, which is likely to become an important town for economic cooperation. It will also bring change of appearance and new opportunities for development in Munsan. "This is worth looking forward to. Even if it may hurt some short-term interests, it will be of significance in the long term."
However, she also said that she has witnessed the successes and failures of the previous two summits. What should be done at present is to support and wait still. "After all, we all know that peace in the peninsula is hard-won."
Editor: Ben Armour