Chinese gobbling up Jeju Island

43% of land bought by foreigners owned by investors from China

By Park Jin-hai

China has overtaken the United States in land procurement in Jeju Island for the first time in five years.

The annual land registration data that the nation’s largest island has submitted to the ruling Senuri Party lawmaker Kim Hee-kuk showed that Chinese now account for 43 percent of its total lot bought by foreigners. Chinese accounted for less than 1 percent in 2009.

Chinese land procurement as of June this year stood at 5.92 million square meters, or 0.19 percent of the land, from less than 20,000 square meters in 2009.

“In the first half, Chinese have already bought 2.77 million square meters, double the total land they procured a year earlier. At this pace, we will see the amount reach 7 million by the end of this year,” said Kim in a statement, Sunday.

The rapid growth of Chinese property investment lowered U.S. investors’ portion to 27 percent as of July 2014, from 49 percent in 2009.

“Chinese investment in Jeju real estate has surged since 2010 when the island started issuing permanent residency status to foreign investors,” Kim said.

With the surge of an inflow of Chinese funds in relatively a short period of time, there could be such adverse side effects as overdevelopment and the exit of national wealth, he said.

Jeju Island issues permanent residency status to non-Koreans who purchase apartments or condominiums worth over 500 million won and reside there for more than five years.

In contrast, Japanese, due to the political conflicts involving Dokdo and war-time sex slavery, as well as yen’s depreciation, have been reducing their holdings of properties in the island, the data showed.

Japanese, who came next to Americans in 2010 at 28 percent, decreased to 15 percent as of June this year. Their property registration has contracted 75 percent in 2013, followed by a 23 percent decrease as of June 2014.

“China maintains a policy that curbs speculative real estate investment. People who stay more than one year can only buy land. But, Korea has no such a policy. There are some voices that the country has been selling its property to foreigners in pursuit of immediate gains,” said Shin Geum-mi, professor at Wonkwang University’s Korean Chinese Relations Institute.

Chinese real estate giant Greenland Holdings Group recently expanded its investment to the total of 1.6 trillion won in Jaju’s health town project. The Morning Whistle Group, a consultancy for overseas investment, in its recent report stated that Jeju has emerged as one of the most preferred places for Chinese land developers in the first half of this year.

Faced on the criticism on overdevelopment, Jeju island is considering tightening the foreign residency policy by lifting the minimum investment amount to 1 billion won from the current 500 million won as well as placing a cap on the total number of such investors.