For Chinese real estate speculators, the hottest investment these days is an apartment with a view of North Korea.
Apartment wanted: three bed, two bath, North Korean vista
The northeastern Chinese border city of Dandong, Liaoning province has seen home prices skyrocket in the past few weeks, as investors bet on a growing North Korean economy.
Most of the trade between China and North Korea passes through Dandong, a small city that sits across the Yalu River from the impoverished North Korean city of Sinuiju.
With peace talks starting between Pyongyang and Seoul, Chinese buyers are flocking to the trading hub to seize on what they believe to be a golden opportunity.
Prices for new homes in the city’s New Zone surged from about $44 per square foot last month to about $73 on Thursday, according to Liang Yichen, a real estate broker at Chenyang Property in Dandong.
Last Friday, the day of a historic summit between the leaders of North and South Korea, saw a one-day jump of some $7.3 per square foot – about 12%, Liang told Inkstone.
“People are saying that North Korea is going to have ‘reforms and opening up’,” Liang says, referring to the policy Beijing implemented in 1978 that opened China to the world.
“Dandong’s house prices will definitely rise if that happens.”
About half a mile away from its isolated neighbor, Dandong was the first to feel the pinch when tensions between Beijing and Pyongyang rose over North Korea’s nuclear and missile tests last year.
In the past, trucks had carried food, clothes and fuel to the North through Dandong’s Sino-Korean Friendship Bridge, while North Koreans came to the city to work in factories, hotels and restaurants.
After China stepped up sanctions on Pyongyang in mid-2017, the bustling city fell quiet, with workers forced to leave and trade suspended. Yu Wenqiang, another local property agent, says Dandong’s housing market had been hurt by slowdown.
The New Zone, which was developed near a planned second bridge between Dandong and Sinuiju, was hit especially hard, Yu says. The bridge, which cost $345 million, was never put to use.
But after Kim Jong-un pledged to suspend the nuclear tests and focus on developing the economy on April 20, boom times appear to be back in Dandong.
“Buyers are coming from all across the country: Beijing, Shanghai and nearby cities,” Yu says. “They will call me on their way here to reserve an apartment. The price is going up every day.”
Speculative buying has sent China’s property market on a wild rally since 2016, forcing the government to impose restrictions in dozens of cities to prevent bubbles.
Iris Pang, an economist at ING bank, said the latest buying spree in Dandong has been fuelled by both the city’s low home prices and the expectation of economic growth in North Korea.
“If you want to bet on growth in North Korea, what alternative do you have?” Pang says. “The easiest way is to buy properties in Dandong.”
More adventurous investors are already thinking about going the extra half-mile.
Chinese real estate investment site Uoolu.com and travel company INDPRK have both received inquiries from Chinese interested in investing in North Korea’s property market, Reuters reported.
But at least for now, the reclusive nation does not allow foreigners to buy homes.