North Korea may have threatened to cancel an upcoming summit with President Trump, but Chinese property buyers have been putting their money on peace.
Chinese homebuyers bet on peace in North Korea
Dandong, a small Chinese city bordering North Korea, saw the biggest surge in prices for new properties last month, the highest among 70 cities surveyed in China, according to figures from China’s Bureau of Statistics. Average prices in the city jumped by 2%.
Since late April, Dandong’s property prices have skyrocketed, after North Korea extended an olive branch to South Korea and the United States.
Home buyers from across China have been flocking there to buy into the possibility of a peace dividend. North Korea has promised to work toward denuclearization.
Some observers, however, say that the surge is only temporary, given the historically volatile situation on the Korean Peninsula.
“Dandong hasn’t seen such massive growth in years,” said Zhang Dawei, chief analyst at Centaline Property Agency. “But I don’t recommend investing in its property market now due to the uncertainty of the situation.”
The Dandong government announced on Monday that it had cancelled its annual spring real estate fair, to maintain the “healthy and stable” growth of its property market.
It also introduced several measures to curb sales, including barring buyers who are not from Dandong from selling newly bought properties until two years after the purchase.
Zhang said these measures are not going to stop speculative buyers from hyping up the market, especially because it’s in the local government’s interest to keep the market growing.
Shenzhen of the North
Before North Korea started warming up to the US, Dandong was struggling to get rid of its large supply of unsold real estate.
The “new district” adjacent to the New Yalu River Bridge, which connects China with North Korea, had most of the city’s unsold properties, even though a special economic zone was established in the area in 2015 to facilitate trade with North Korea.
Now, the “new district” is the hottest area to buy. Some have even dubbed it “northern China’s Shenzhen,” named for the city close to Hong Kong that became a major financial center after the government made it a special economic zone in 1980.
“Sales have grown up to 50% in the new district,” said Yu Wenqiang, a property agent at Da Xiang Real Estate based in Dandong.
“We had difficulty selling these properties before given the long distance from the city center, but now people come in groups to buy seven or eight properties at once,” Yu told Inkstone.
Besides property, local media have also reported on investors looking to put money into businesses selling mobile phones and electronics to North Korea.
A successful Trump-Kim summit in June could mean a windfall for the people of Dandong.