North Korea’s real estate black market
Some great qualitative information on the DPRK’s underground real estate market from Radio Free Asia:
Central authorities are investigating the practice in all of North Korea’s major cities and have confiscated the homes of “dozens” of local officials in the city of Chongjin, one well-informed source who asked not to be named said.
Private ownership or sale of homes is forbidden by the North Korean state, which assigns dwellings to its citizens based on its own determination of need.
“Most government officials build their residences in the North Korean equivalent of suburbs, in areas that are close to the city but still have a rural flavor,” the source, a Chinese merchant who does business in North Korea, said.
“They sell them when they retire.”
“If someone sells a 50-pyong (1,800-square foot) house in such an upscale neighborhood, he can then buy a house that is three or four times bigger in a different area,” the merchant said.
Party and state officials receive permits and order state-run construction companies to build homes in suburban areas near the sea, the merchant said.
He added that the value of real estate privately sold in North Korean port cities is now appreciating at twice the rate of real estate sold elsewhere in the country.
High-quality materials, including expensive appliances and wallpaper, are often used in the building of officials’ homes, according to a North Korean defector originally from Chongjin but now living in South Korea.
“Small but elegant” patios are sometimes also included, he said.
To justify the construction and occupancy of a larger space, local officials build multi-unit structures and fill them with relatives or people of more modest means, the defector said.
When the officials retire, they pay the other occupants to move and then sell the entire structure.
North Korean authorities have now sent “task forces” to each of North Korea’s major cities to investigate real estate deals by local officials, the border merchant said, adding that a 40-member group was recently sent to Chongjin, where the homes of dozens of officials were seized.
An official in the city’s Songpyong Ward has reportedly been demoted and reassigned to a more backward part of the country, and fines equal to the actual value of transactions have been imposed on citizens who bought or sold homes.
Some thoughts:
1. IFES reported that private real estate transactions were quite common last september.
2. This report, combined with previous accounts, indicates that, although illegal, the DPRK’s real estate market is quite rational. Construction quality and location influence housing prices. According to the Daily NK, the qality of the chairman of the neighborhood people’s committee also influences the price.
3. Could the effort to crack down on these transactions be part of the plans to achieve a “Strong and prosperous nation” by 2012?
Read more here:
North Korean Economy Watch: real estate posts
North Korea’s Black-Market Housing
Radio Free Asia
Jung Young
1/23/2009
Private sector real estate activity booming in the DPRK
Institute for Far Eastern Studies (IFES)
NK Brief No. 08-9-4-1
9/4/2008
Who Is the Chairperson of the People’s Unit?
Daily NK
Moon Sung Hwee
8/18/2008
