Archive for the ‘Real estate’ Category

KKG in Pyongyang

Wednesday, June 24th, 2015

UPDATE 3 (2015-6-24): Writing in the Financial Times, Tom Burgis links Queensway Group/KKG with Office 39.

UPDATE 2 (2015-5-1): J.R. Mailey has much more information on the Queensway Group/KKG.

UPDATE 1 (2014-7-17): Over at 38 North, J.R. Mailey has uncovered much more information on KKG (Queensway Group) and linked it with the Kaesong High Tech Industrial Park.

ORIGINAL POST (2012-9-11): “Kumgang Street/KKG Avenue Project in Pyongyang”: Aggressive construction and re-development projects have taken place on Pyongyang’s Mansudae Street over the last few years as part of the DPRK’s “Strong and Prosperous Nation (강성대국)” policies. See Mansudae renovation no. 1 here and Mansudae renovation no. 2 here.

Residential construction projects, however, have been limited neither to Mansudae Street (See here, here, here, here, hereherehere, here) nor to Pyongyang. In the interest of [my] time, I will offer only the most recent example: There are reports of an ambitions real-estate project in Chongjin, though satellite imagery in the area is too old to confirm the project or evaluate its size/scope.

However, a recent tourist photo taken in Pyongyang near the Tongil Market reveals yet another ambitious plan for residential development in Rakrang-guyok (락랑구역). It is unclear how long this project has been planned or if/why it appears to be on hold. Here is the photo of the billboard:

Click here to see a larger version of this photo on flickr.

According to the billboard, this project bears the name “Kumgang Street” in Korean (금강거리) and “KKG Avenue” in English. The operation appears to be run by 금강경제개발총회사 (The Kumgang Economic Development Corporation). A quick Google search for “금강경제개발총회사” yields pleanty of results, but all of them are in Korean–meaning it will be excruciatingly painful for me to do any research on this organization. If you can determine anything else about this project, please let me know.

From what I can tell, this effort is set to take place just north of the Tongil Market (conspicuously absent from the billboard, though enhanced with a wide avenue and bridge to Yanggak Island). Here is the approximate location as seen on Google Earth (I have added the position of the proposed Yanggak Bridge to make the comparison easier):

According to the billboard, the Mullet Soup Restaurant on the bank of the Taedong River will be part of the finished project.  The remainder of the land looks like it has been cleared and prepared for the development project, although historical imagery on Google Earth indicates that this land has been largely unused for decades. The image below dates from 2000-6-12:

 According to “The Skyscraper Center” the tallest building(s) in the new development will be 274m/899 feet.

I have been able to find out little more about this project. Again, if you can find additional information, please let me know.

Share

DPRK real estate market: sustained boom, or bubble?

Saturday, April 11th, 2015

According to the Hankyoreh:

“They say there are apartments in Pyongyang selling for US$200,000.”

Jung Eun-yi, a research professor at Gyeongsang National University, was talking about how rapidly housing prices in North Korea have been rising. Jung had just returned from spending January and February in Dandong, China, where she had been tracking trends in the North Korean housing market. In July 2014, the highest price for an apartment in Pyongyang that heard about in Dandong had been US$100,000.

Needless to say, this doesn’t mean that an apartment worth US$100,000 had doubled in value to US$200,000 in the past six months. Nevertheless, the appearance of apartments worth US$200,000 indicates just how quickly Pyongyang apartments are increasing in quality, size, and value.

Jung is one of the foremost experts in South Korea on prices in the North Korean housing market. She received considerable interest from the media because of a paper that she presented at the World Conference on North Korean Studies at the end of Oct. 2014 in which she reported that some apartments in Pyongyang were selling for US$100,000.

In 2013, she had gained attention in the academic community by publishing a paper that included a detailed breakdown of housing prices in the North Korean city of Musan, North Hamgyong Province, down to the neighborhood.

Based on the data collected during her most recent stay in Dandong, Jung argues that there are signs that the housing market in North Korea is turning into a real estate market, rather like South Korea. If a housing market is one in which houses are bought simply for the purpose of living in them, a real estate market is formed when people start to see the houses they buy both as a residence and an investment.

What enabled Jung to publish such a pioneering paper on the North Korean housing market is that she spends all four months of her summer and winter vacations each year in Dandong, where she researches trends in the North Korean housing market.

Jung says that there are several reasons why she is interested in the North Korean housing market. The market offers hints at how the North Korean market economy is developing; it reflects the economic policies that the Kim Jong-un regime are adopting; and it provides a great deal of information about the appearance of a propertied class inside North Korea and about the growing wealth gap between the rich and poor.

What follows is a summary of the interview that Jung gave to the Hankyoreh on Mar. 30, organized by topic.

North Korea’s housing market: most profitable business area

Jung explains that one of the biggest recent changes in the North Korean housing market is the participation of North Korean trading companies. The reason, she says, is that building and selling houses has become even more lucrative than trade.

Why would that be? Jung explains that, while there is a lot of potential demand, there is a limited number of suppliers, creating a monopoly in the market. In other words, it’s easy to find buyers once you build a house.

But there’s just one catch. Before trade companies can jump into the housing market, they have to be working with someone who has connections in North Korea’s bureaucratic system.

As of now, housing transactions in North Korea are technically illegal. Given this situation, it is essential that a business have access to someone who can negotiate the bureaucracy so that it can provide the person buying the house with the permit that is legally required for them to move in.

According to Jung, no matter how much financial backing a developer may have, “they will fail without a partner who can cut through all the red tape.”

The growth of the house-buying class

Jung says that the price of housing in North Korea is linked to rice and US dollars (the exchange rate). When calculations are made in rice, the preferred unit is the ton.

The growth in a housing market that involves the movement of such huge amounts of rice and dollars implies that an increasing number of people in North Korea have that much purchasing ability.

The increasing level of purchasing power, or disposable income, can also be verified in the fact that houses in North Korea are improving in quality every day.

The concept of the “front room” was introduced in some ritzier North Korean houses back in the 1990s. Front room means a living room that includes a kitchen with a sink, rather than the traditional coal-burning kitchen. But even since then, houses have been becoming more elaborate, some using high-quality materials from China.

However, the very increase in the number of people with property – the consumers of these new houses – also implies that the gap between the rich and the poor is widening. Behind every house that is sold is a family whose financial destitution leaves them no choice but to sell the house in which they had been living. In this way, the growth of the housing market in North Korea offers another glimpse at the growing wealth disparity there.

Predictions for the North Korean housing market 

Jung expects that the North Korean real estate market will continue to expand for a significant period of time. Just as in South Korea, there was also an explosion in demand for houses in North Korea starting in the early 1980s because of the baby boomers, the generation of those born around 1957.

However, the demand in North Korea was suppressed by the “arduous march,” Jung believes. During this famine in the mid-1990s, when the severe shortage of food caused people to starve to death, the massive flight of people out of the country actually led to an increase in the number of vacant houses around North Korea’s border with China.

But with the subsequent development of private markets and the appearance of people with money to spend in the 2000s, these vacant residences were the first to be sold at cut-rate prices. This signaled the beginning of growth in the housing market.

Housing prices in North Korea increased rapidly then faltered during the currency reform in 2009, when the Kim Jong-il regime attempted to put limits on these markets. But from 2011 to 2014, after the North Korean government started to tolerate the markets again, housing prices soared once more.

Jung believes that the growth trend in North Korean housing prices will continue for the time being. The reason is that demand for housing both among baby boomers and among new members of the propertied class is likely to continue.

The North Korean housing market and Kim Jong-un’s economic reforms

Jung explains that the regime of Kim Jong-un is taking steps toward normalizing the housing market. Presumably, the regime has concluded that the official economy of the country is suffering major losses because the housing market is outside of the system.

As one example, Jung cites housing deals between private citizens in the 1990s. While the volume of transactions greatly increased during this period, the failure to solve the issue of legal collateral resulted in unending disputes about these transactions.

There was also widespread corruption connected with them. Jung says that sometimes the housing allocation department of the urban management bureau of the people’s committee – which is in charge of issuing residential licenses – would confiscate houses that had been illegally bought by low-ranking officials and then conduct business with those houses themselves. Since the housing market did not go beyond individuals making money, it did not benefit government finances.

Jung believes that the Kim Jong-un regime was trying to stamp out this kind of corruption when it established housing delegation offices in 2013. These offices are public organizations whose purpose is to take money from public citizens and to build them a new house. The existence of this organization is another example that both central planning and market forces are at work in the North Korean economy today.

Jung sees this as being part of efforts to institutionalize market mechanisms. “This is evidence that the Kim Jong-un regime is going beyond the military-first policy known as Songun that was instituted by Kim’s father and moving down the path toward socialist capitalism,” she said.

Housing market: A market economy learning center

According to Jung, the housing market is turning into a “learning center” writ large for the market economy – not just for the Kim regime, but for the North Korean public. Most crucially, housing prices in North Korea are already being decided based on a variety of factors, including access to transportation, markets, nearby facilities, and even the number of floors. As an example, Jung mentioned the price of apartments in Musan, a county in North Hamgyong Province. The most expensive apartments on the market there are seven-story buildings for “people of national merit.” But the most expensive, she said, are not the seven-story blocks, but the five-story ones. The smaller buildings go for more because they don’t have elevators, which makes them better for moving firewood. One- to two-story buildings are less popular because they are seen as similar to South Korea’s, Jung added. Even in North Korea, a number of different variables go into shaping housing market prices.

Chinese presence in the North Korean real estate market 

Jung also noted that some Chinese people have begun branching into the North Korean real estate market. Chinese residents of North Korea who were interviewed in Dandong indicated that more and more Chinese have begun investing after seeing the real estate. North Korea has not yet made its housing fully open to foreigners, but those who invest in North Korea are reportedly allowed to buy housing for temporary residence. It’s a sign that regulations on foreign activities are being relaxed. As a result, an increasing number of Chinese people are investing in needed areas such as toll processing and solar energy development in Pyongyang and other places – and acquiring housing and land in the process. The strategy is twofold: immediate gains, along with more long-term profits from the land.

The real estate housewives of North Korea? 

“It hasn’t reached that point yet, but the signs are there.” According to Jung, relatively rigid enforcement of the one-family, one-home rule in North Korea means the country has yet to develop a visible community of “housewife speculators” buying and selling homes for profit. But there have been cases of people buying homes under their mother’s name, or investing when a house is still incomplete and cheaper before turning around and selling at a higher price when it is finished, she added. Both are similar to the kinds of behaviors seen among South Korea’s housewife speculators. As these activities increase, Jung notes, the idea of the home as a place of residence only is giving way to the idea of real estate as an investment – even in North Korea.

The increasingly market-oriented nature of the North Korean housing market, and the Kim Jong-un regime’s attempts to incorporate the changes into its system, led Jung to predict that the shift toward market economy principles will only grow and intensify going ahead. The question now is whether this market-oriented real estate market will lead North Korea to reprise the disastrous experience of ’70s-era Gangnam as the economy grows – or whether the result will be something completely different.

Read the full story here:
North Korean real estate market: sustained boom, or bubble?
Hankyoreh
Kim Bo-geun
2015-4-11

Share

New apartment construction in Sinuiju

Wednesday, January 14th, 2015

Chaeha-sinuiju-apartments

Pictured above (Google Earth: 2014-8-6): New apartment housing in Chaeha-dong, Sinuiju.

According to the Daily NK:

The real estate market in a strategic location of North Korea is heating up, with a recently new venture seeing apartment units being traded for up to 30,000 USD , the Daily NK has learned.

“Real estate development in Sinuiju City has been pretty active since two years ago,” a source based in the province told the Daily NK on Tuesday. “Starting last July or August, construction for high-rises has been underway in the Chaeha-dong neighborhood.”

The apartments in Chaeha-dong are being built on joint investments from foreign currency-earning enterprises and the donju [the new affluent middle class], according to the source. To clear the way for the lucrative project, Chaeha Market, the largest distribution market in the city, has been relocated to park grounds located in Namsang-dong.

While private property purchases remain illegal in North Korea, beleaguered by economic hardship, the state dolls out tacit consent to these endeavors, encouraging increasingly more illicit trade within the burgeoning real estate market.

In areas like Sinuiju, a main portal to and from China, there is no shortage of solvent buyers eager and willing to pay for property in the area, knowing its value will only continue to increase. The apartments taking over the Chaeha Market grounds are modern buildings of roughly 100 square meters, constructed from materials exclusively imported from China. Situated in a prime location near Sinuiju Customs House, the complex offers convenient transportation options compared to other locations, warranting the relative high prices, according to the source.

Units in the complex come in three varieties, depending on their stage of completion: “If only the framework of the apartment is put up, it is sold for 20,000 USD; if interior construction is completed, it trades for 25,000 USD; and if decorative touches are added, it fetches 30,000 USD,” she explained. According to exchange rates in North Korean markets on the 7th, 1 USD trades for roughly 8,000 KPW.

Labor for the cause consists of workers from state-run enterprises and “8.3 Workers” with special expertise. The term, “8.3 Workers,” stems from a system where workers earn money outside their state-mandated workplaces and present de facto tax payments back to their employers but also keep a portion of the profits. In this case, the “8.3 Workers” are sectioned off into “8.3 Units” of five to eight people, tasked with plastering or putting down tiles in one unit within the residential complex.

Regarding compensation for their work on the new building, “8.3 Groups” reach an agreement with the construction company, affiliated with a foreign-currency earning enterprise, on rates and then work around the clock once ground breaks on the project. “Time equals money,” as the source said, adding that one worker is estimated to receive roughly 30,000 [3.75 USd] to 50,000 KPW [6.25 USD] a day of work and is guaranteed rations and meals.

For investors, however, the project yields far more significant returns. “If an individual invests in one of these companies’ real estate construction project, the profits are divided up 3:7 and the investor receives a 30 percent share from sales of the completed property,” the source explained.

Donju invest in housing construction projects with these firms because they are unable to receive legal permission from the Ministry of Construction to engage in such personal investments. Although donju involvement in these undertakings has been known to sometimes take the form of loans offered to construction firms at lofty interest rates, this method proves less popular for the simple fact that there is less guarantee for them to receive what they are owed; needless to say, no laws exist to protect these–by official North Korean law–illicit transactions.

This fact propels most of the donju to invest in the permanence and relative stability property offers, all while skimming 30 percent of the overall profits from the sale; it is also why the source speculated this form of investment to continue to gain traction.

She added that demand for news persists on with unhindered growth. Party cadres and the donju continue to purchase completed units; in fact, many even buying two or three units using their relatives’ names to ensure future usage.

Meanwhile, residents of Chaeha-dong in Sinuiju are currently residing at the Sinuiju Medical University dorms or at homes of their relatives. The source reported that these temporarily displaced persons will be moving in, free of charge, to the newly built apartments following their completion. She noted, however, that this contingent forms a disproportionate percentage to those who have purchased units within the complex.

Read the full story here:
Real Estate Market Booming in Sinuiju
Daily NK
Seol Song Ah
2015-01-14

Share

DPRK reportedly bans unauthorized wireless networks at foreign embassies

Tuesday, September 9th, 2014

According to Itar-Tass (Russia):

North Korean authorities have banned foreign diplomatic missions and branches of international humanitarian organizations working in the country from using any kind of wireless communications without government approval, starting from Monday.

The state department regulating radio frequencies said controls extending to satellite and Wi-Fi were in the interests of national security.

Regulations demand that foreign missions immediately dismantle all equipment providing such means of communication or face penalties including a substantial fine, enforced suspension of those systems and their confiscation.

Officials said foreign representations would be allowed to use equipment only after authorization.

A recent report in The Diplomat claimed that the black market price of housing near the Munsu diplomatic compound had gone up as people sought residencies that could access the internet.

Housing prices have skyrocketed in a residential area of Pyongyang where the foreign embassies are located as North Koreans are scrambling to move to that area, expecting to use the embassies’ Wi-Fi, North Korea Intellectuals Solidarity (NKIS) — a Seoul-based think tank — reported on August 6. The world wide web has long been totally banned in North Korea.

NKIS said the phenomenon became apparent in June when North Korean authorities arrested a broker who enriched himself by facilitating the purchase of housing in that area.

A man with the surname Cho helped people living in Pyongyang’s rich districts such as Central District and Potonggang District sell their houses and move in near the foreign embassies, NKIS reported. It is illegal for people to make real estate deals among individuals.

NKIS added that the reason why North Korean people want to move to the area where the foreign embassies are located is that they are able to use the Wi-Fi coming from the embassies. Since some of embassies have very strong Wi-Fi signals and some don’t even have passwords, people living around the embassies are able to access the Internet using the embassies’ Wi-Fi.

NK News received a copy of the official order from the State Radio Regulatory Department:

All the Diplomatic Missions and International Organizations to

The Democratic People’s Republic of Korea

The State Radio Regulatory Department, Democratic People’s Republic of Korea, presents its compliments to all the Diplomatic Missions and International Organizations to the DPRK and has the honour to inform that the signals of regional wireless network, installed and being used without licence, produce some effect upon our surroundings.

Therefore, it is kindly notified that the regional wireless network is abolished here according to Article 18, Chapter 3 of the Law on Radio Regulation, and that the Missions, who would like to use the regional wireless network in future, should seek a consultation with the State Radio Regulatory Department.

It would be appreciated if the Missions could positively co-operate in the current measures taken for the security of the DPRK.

The State Radio Regulatory Department, Democratic People’s Republic of Korea, avails itself of this opportunity to renew to all the Diplomatic Missions and International Organizations to the DPRK the assurances of its highest consideration.

The State Radio
Regulatory
Department,

Democratic People’s
Republic of Korea

Pyongyang
August 13,
2014

Appendix

Article 18, Chapter 3 of the DPRK Law on Radio Regulation; The institution, enterprise, organization and citizen who would like to form or use the wireless communication network and satellite communication network here should seek the licence from the Radio Regulatory body.

Article 61, Chapter 4 of the enforcement regulations for the DPRK Law on Radio Regulation; In case of having violated this rules and regulations relative to the application of the Law on Radio Regulation, a fine amounting up to 1,500,000 Wons will be imposed , or such punishment as interrupting the operation or forfeiting the equipment will be inflicted according to the circumstances.

Share

Lake Yonphung Holiday Home for Scientists

Tuesday, September 9th, 2014

North Korean television has shown a satellite image of the new “Lake Yonphung Holiday Home for Scientists” (연풍호과학자휴양소):

yonphung-rest-house-maps

 

Although it does not appear on Google Earth, it appears to be located in the south-east corner of the lake, away from the leadership resorts on the lake.

Laky-y-phung-overview

Share

Mixed priorities in construction in Hyesan

Thursday, July 10th, 2014

According to the Daily NK:

Kim Jong Eun recently ordered an education center for orphans in Hyesan to be rebuilt and expanded, Daily NK has learned. The North Korean leader is also said to have personally guaranteed the necessary materials for the project. However, this is fostering discontent within the local construction sector.

“The construction process there has been rapid since the inputs were guaranteed by the Marshal, so they are now in the closing stages,” a source from the Yangkang Province capital reported to Daily NK on the 11th.

The decision to place the state’s strength behind the project has, the inside source said, caused anger in other construction units, since only one of many is receiving inputs of money and materials from Pyongyang, while others are being forced to sustain themselves.

“Other construction projects, including apartments for local people to live in, are being put back,” the source said. “It’s common to see workers messing about and killing time on construction sites. Some houses in the city have been demolished to build apartments, but in some areas that construction hasn’t even started yet.”

According to citywide sources, there are numerous construction projects underway in Hyesan these days, including an indoor stadium, an eatery called Amrokgak, and civilian apartment blocks. However, as the source noted, most are progressing slowly due to chronic supply shortages, while the education center for orphans, which got underway much later than most others, is moving at lightning speed in comparison.

Facilities exist in each province of North Korea to educate parentless children up to the age of 15. The system is divided into four sectors: up to four years of age, four and five years of age, elementary school age (6~9), and middle school age (10~15). Each province has at least one of each type. The facility in Hyesan caters to the latter two age cohorts.

“Clothes and food there are provided by the center,” the source explained, adding that electricity is also more predictable there than in most other parts of the city.

However, she cautioned, “It’s unwise to have complete faith in units receiving special treatment. Even a Pyongyang apartment block collapsed in May, and it was for senior people so they probably used good materials.”

It is not clear why the Kim regime is offering special treatment to this particular site, though it may be because foreigners risk doing harm to North Korea’s public image by photographing them, or simply to bring under control the groups of Kotjebis that tend to linger around the station and marketplaces. Irrespective of either goal, it also allows for propaganda about Kim Jong Eun’s “love for the young,” a core propaganda trope that surrounds all North Korean leaders. Kim Jong Eun has visited a large number of education facilities in the first years of his rule to emphasize his concern for the development of the country’s young generation.

Read the full story here:
Hyesan Orphans Given Special Treatment
Daily NK
2014-7-10

Share

Black market home prices falling

Thursday, January 9th, 2014

According to Radio Free Asia:

Houses in impoverished North Korea are fully owned by the government and trading on them is forbidden. But some dwellers “sell” their homes illegally with the approval of corrupt officials to cash in on the acute shortage of homes.

Sources in provinces along North Korea’s border with China told RFA’s Korean Service that the value of their home transactions had fallen by as high as 85 percent from last summer.

“Housing prices in Gilju-gun, North Hamgyong province, dropped to around U.S. $500 from what was U.S. $3,300 last summer,” a source from the province told RFA’s Korean Service on condition of anonymity.

He said that in North Hamgyong’s Cheongjin city, the trading price for a two-bedroom home had plummeted to around U.S. $3,300 from U.S. $8,300 in the summer last year, and yet no buyers were showing any interest.

Another source from Yanggang said housing prices in his province had been similarly affected in the last several months.

“I was barely able to afford my house near the Yalu River [separating North Korea from China] at around U.S. $3,300 early last year,” he said, also speaking on condition of anonymity.

“The trading price of my house, which was still U.S. $3,300 in August last year, has now dropped to about U.S. $990.”

The Yanggang source said the housing crash began in the fall in the capital Pyongyang and had led to widespread unease because the cause of the depreciation remained unknown.

He added that it was impossible to guess how far prices would drop.

Other sources said that the market crash had led to increased tension in the affected areas.

Read the full story here:
Housing Prices in North Korea Plunge on Black Market
RFA
2014-1-9

Share

Building the economy and construction projects emphasized once again

Friday, December 27th, 2013

Institute for Far Eastern Studies (IFES)
2013-12-27

In an effort to restore the mood of economic development following the ‘terror politics’ created from the execution of Jang Song Thaek, North Korean state media is beginning to emphasize “construction of a powerful economy” and “improvement of people’s lives” once again.

Rodong Shinmun reported on December 19, 2013 that all fields reached their production plans for the year, describing (on page 3) exemplary cases of various party organizations that upheld the legacies of Kim Jong Il and “displayed best practices that actively contributed to improving people’s lives.”

In one article (“Advancement in Science and Technology Is the Lifeline of Constructing a Powerful Economy and Improving People’s Lives”) the importance of science and technology was emphasized. It claimed, “breakthrough in science and technology is the best way to achieve a miracle and innovation in production while protecting the dignity of the nation in the era of knowledge economy.”

Korean Central Television, Korean Central Broadcasting, and Pyongyang Broadcasting encouraged its people to realize “new miracle, new record” in the production fields emphasizing the goals of the Kim Jong Un regime, “construction of economic powerhouse,” and “construction of civilized socialist nation.”

In addition, the military was presented with modern fishing boats. Kim Jong Un’s gift to the military may be interpreted as a display of interest in improving the welfare of soldiers. Kim Jong Un was reported to have made an on-site inspection at the “8.25 Fishery” military unit and expressed interest in the welfare of the soldiers.

Kim Jong Un is also continuing to commend “best citizens” as he delivered letters of appreciation to recognize those that displayed exceptional performance at the construction sites of Sepho Tableland and the residential complex for Kim Il Sung University (KISU) faculty members.

In the Kim Jong Un era, state media is continuing to emphasize the achievements in the construction sectors, calling these times a “new heyday of juche construction.” It listed last year’s construction achievements: completion of Changjon Street, People’s Theatre, Pyongyang Children’s Department Store, Rungra People’s Pleasure Park, People’s Outdoor Skating Rink, Pyongyang Folk Park, and Ryugyong Health Complex.

In addition, it boasted that Munsu Water Park was “miraculously” completed in only nine months. Other achievements were listed: War Memorial, Mirim Riding Club, Ryugyong Dental Hospital, Okryu Children’s Hospital, Unha Scientists Street, and KISU faculty apartment complex.

North Korea is propagating these achievements, heralding the Kim Jong Un era as the “glory days of construction” to promote his accomplishments and consolidate his power base.

During his own period of succession, Kim Jong Il sought the support of the masses by emphasizing construction of Changgwang and Munsu Streets and landmarks such as Juche Tower, Kaeson Mun (Gate of Triumphant Return), and Pyongyang Maternity Hospital.

Share

Evaluation of Kim Jong Un’s first two years: The rise in construction of sports and entertainment facilities and exports to China

Wednesday, October 16th, 2013

Institute for Far Eastern Studies (IFES)
2013-10-16

The first chairman of the National Defence Commission of North Korea, Kim Jong Un, took office two years ago. Since then, construction of sports and entertainment facilities are reported to have increased considerably. According to the South Korean Ministry of Unification, North Korea’s Pyongyang Folk Park (September 2012), Taesongsan General Hospital (March 2013), and Haedanghwa Service Complex (April 2013) were recently completed. Since the launch of the Kim Jong Un regime, the Masik Pass Ski Resort and other similar sports facilities have been undertaken and are nearing completion.

In addition, the People’s Theatre (April 2012), Rungna People’s Pleasure Ground (opened in July 2012), Sunrise Restaurant (September 2012), and Unification Street Center (September 2012) have been recently renovated. In addition, the Mirim Riding Club, Pyongyang Gymnasium, Munsu Wading Pool, Aprok (Yalu) River Amusement park, Karma Hotel, and New Day Hotel and other hotels around Pyongyang are currently under renovation and repair. Entertainment and sports facilities around other major cities are being constructed as well. Furthermore, after the successful launch of Kwangmyongsong 3-2 last December, North Korea has begun to construct major residential complexes for scientists, granting them preferential housing in Unha scientist residence, Kim Il Sung University educator residence, and Pyongsong residence. Other large-scale housing projects are also reported to be under development.

In the wake of major celebrations in North Korea — such as the 100th anniversary of the birth of Kim Il Sung and 60-year anniversary of the “Victory in the Fatherland Liberation War” — a large memorial was erected and existing facilities were repaired. Specifically, the Korean People’s Army Exhibition of Arms and Equipment, Kumsusan Memorial Palace, War Victory Monument, and the Cemetery of the Fallen Fighters of the KPA were refurbished.

Unlike the large-scale construction of sports and entertainment facilities, new constructions of harbors, roads, power plants and other social overhead capital (SOC) is reported to be in decline.

Last August, North Korea’s trade with China has shown an 8 percent increase in exports and 6 percent decrease in imports, following a similar trend from last year. According to the South Korean Ministry of Unification, North Korea’s current trade volume with China is reported to be 4 billion USD (1.89 billion USD in exports and 2.2 billion USD in imports).

North Korea’s most popular export items are mineral resources such anthracite, coal, and iron ore. In the case of clothing products — which are mostly consigned processing — there has been an increase of 42 percent (200 million USD) against the previous year. Major categories of imports from China are crude oil, food, and fertilizers. Compared to the previous year, food imports have declined 57 percent (17.4 million tons), and fertilizer and crude oil imports are also showing gradual reduction at 27 percent (18.3 million tons) and 6 percent (34.6 million tons), respectively.

Share

Pyongyang seeking to build 100,000 housing units [on hold]

Monday, July 1st, 2013

UPDATE 6 (2013-7-1): The Daily NK reports the effort to construct 100,000 homes in Pyongyang has come to a complete halt. According to the article:

A troubled prestige project to build 100,000 new homes in Pyongyang has been brought to a complete halt under the rule of Kim Jong Eun, and buildings in some areas have fallen into a state of disrepair.

A source from the North Korean capital revealed to Daily NK on July 1st, “The 100,000 homes project has been at a complete halt since Kim Jong Eun took power, and on the outskirts of the city some buildings are half-built and collapsing into a state of disrepair.”

“In this area, people were evacuated in October 2009 so that the construction could commence,” the source went on. “But in many areas those buildings that were begun at that time are still not above the first floor.”

Homes planned as part of the project, which, according to state propaganda, was to form part of celebrations for North Korea’s becoming a “strong and prosperous state” by the 100th anniversary of Kim Il Sung’s birth in April 2012, were expected to feature in propaganda vis-a-vis Kim Jong Eun’s greatness.

However, the project has been plagued by electricity and material shortages from the beginning, sources say, and ultimately could not be completed. In some areas, the construction that did go ahead was poorly done and buildings have subsequently collapsed, which has caused deaths.

The source commented, “From Kim Jong Eun’s perspective the project was promoted so that he could say he was improving the people’s lives. But there were no raw materials and no power, and this caused poor construction; so ultimately it has just been abandoned.”

The North Korean authorities are only genuinely concerned about projects that offer short-term opportunities for public propagation of results, such as water parks and exercise facilities in downtown Pyongyang, the source went on to claim.

Meanwhile, the direct suffering caused by the failed project is falling primarily on those who were moved out of their homes in order for construction to start back in 2009. “In a number of cases, the Party ordered families to move out and live with others temporarily, and here we are, four years on, with multiple families living under one roof,” the source said, adding that the indignity of this is being compounded by mobilization orders calling on people without homes of their own to take part in downtown beautification and cleaning schemes.

I have have posted quite a bit of material on construction in Pyongyang in recent years.  Here are some of the more relevant articles:

1. Mansudae Area Renovation No. 1

2. Mansudae Area Renovation No. 2 

3. Kumgang Street

Read the full story here:
100,000 Homes Project Stopped Dead
Daily NK
Lee Sang Yong
2013-7-1

UPDATE 5 (2011-11-03): The Institute for Far Eastern Studies (IFES) reports on the status of Pyongyang’s residential construction effort.

North Korea Pushing Forward with the Project of Constructing 100,000 Housing Units in Pyongyang

In order to celebrate Kim Il Sung’s centennial birthday next year on April 15, 2012, the plan to build 100,000 private homes in Pyongyang is quickly underway. North Korea has announced its intension to upgrade Pyongyang into a city with over 100,000 homes. Pyongyang’s district of Mansudae is to build over one thousand units of high-rise apartments (77 stories), theaters, parks and other recreational facilities.

The KCNA reported on October 11, “For the next Day of the Sun, Pyongyang will be completely transformed.” The news added, “The construction of private homes has been in progress for five months and is at 70 percent completion. Mansudae District is rapidly changing with skyscrapers and high-rise apartments appearing throughout the city. Construction of theaters and service facilities are also in development.”

Facing Mansudae is [East] Pyongyang [area], another area in Pyongyang under enhancement and has secured over 17,400 square meters of land for multi-purpose service facilities and 9,660 square meters for a public outdoor ice rink. The KCNA elaborated, “The multi-purpose facilities encompass bathhouses, beauty salons, and other latest facilities of convenience. In the public outdoor ice rink, circular ice rink, bleachers and cultural recreational facilities will be built to provide necessary environment for people to enjoy various ice sports.”

Rungrado Recreation Ground is also reported to be rejuvenated with a variety of amusement rides and multipurpose water park. The water park will be equipped with wave pools, waterslides, and health pools.

In addition, Pyongyang is focusing on gardening and exterior beautification projects for private homes and public buildings, including installation of colorful tiles and paints as well as bright neon signs in the streets.

“The Development Project of 100,000 Housing Units in Pyongyang” went into effect since 2009 but talks of reducing the project to 20,000 homes surfaced when it was faced with funding difficulties. However, the original plan of building 100,000 homes has not faltered and appears to be in full swing.

Early this year on January 3, a public rally was held at the Kim Il Sung Square with over 100,000 people present. At that time, the homebuilding project of Pyongyang was announced in which “Pyongyang City will be equipped to enter the era of strong and prosperous nation in all sectors.”

In July 2008, the General Bureau of Capital Construction began a large-scale redevelopment project. Completed a year later on September 2009, 600 old homes mostly built in the 1960s were demolished and in their place an apartment complex with over 800 homes went up. This project received undivided attention from Kim Jong Il, Chang Sung-Thaek, administrative director of the Worker’s Party of Korea, among many other top officials of North Korea.

For North Korea, “The Development Project of 100,000 Housing Units in Pyongyang” has become a symbol of building a strong and prosperous nation.

Additional information:
1. Previous posts on the DPRK’s “2012 Kangsong Taeguk” policies can be found here.

2. Previous posts on “Construction” can be found here.

3. The Pyongyang’s university students are (mostly) involved in construction projects.

4. See photos of the construction by Ray Cunningham here.

UPDATE 4 (2011-7-23): Housing unit construction revised down?


Pictured above (Goole Earth): New housing construction in Rakrang-guyok

For several years, the DPRK has been touting that it will build 100,000 new housing units by 2012. See here, here, and here for background.

This week, many South Korean news outlets reported that the DPRK had significantly downsized that number.  According to Yonhap:

North Korea has dramatically cut its goal of building 100,000 houses by next year, a government source said Monday, amid the North being economically squeezed by the international community for its nuclear and missile programs for years.

After the North started the project in Pyongyang in 2009, as part of its plans to achieve a strong and prosperous country by 2012, the North cut the number of planned houses by 75 percent to 25,000. The year 2012 marks the centennial of the birth of Kim Il-sung, the country’s late founder.

The North, however, is continuing to repair a towering bronze statue of Kim and renovate around the Kumsusan Memorial Palace, where his embalmed body lies, the source said on condition of anonymity, citing policy.

Kim is the father of current leader, Kim Jong-il. The Kims are the subject of a massive personality cult that pervades almost every aspect of North Korean society.

Still, the North has embarked on a project to demolish buildings and facilities in central Pyongyang to make room for high-rise apartments, a theater and a park for senior officials.

The North has begun interior work on one of its landmarks, the 105-story Ryukyong Hotel, which stood unfinished in downtown Pyongyang for nearly 20 years due to a lack of capital.

In 2008, the North resumed construction of the skyscraper, but it appears unlikely for the project to be completed next year. It is believed, however, that the North will finish some floors for use.

The last time that KCTV mentioned the 100,000 housing unit goal was on May 26, 2011…nearly a month ago.  I will keep up to see if it is ever mentioned again.  I would not hold my breath waiting for a lower number to be announced, however.

Using satellite imagery of Pyongyang, I can see appx 200 residential buildings under construction.  They are mostly concentrated in Hyongjesan-guyok.  On average, each of these buildings would have to contain 500 housing units to reach 100,000.  This is not possible given the dimensions of the buildings we can see. Additionally, most of these facilities are a long way from being completed.  With a goal of 25,000, that would mean new buildings on average would only need to contain 125 units…a much more reasonable number.

In terms of residential construction, the government now seems to be focusing its efforts primarily on completing the second phase of the Mansudae Street renovations in time for Kim Il-sung’s 100th birthday. See here and here.

The prestigious units (visited by Kim Jong-il) that have been completed are all in Pyongyang’s Central District: Near the Potong Gate (Google Maps), Near Haebang Hill (Google Maps), and behind the Central Market (Google Maps).  I should point out, however, that these are not the only buildings to be completed.  Other less-prestigious buildings have been completed and occupied.  Also, many villages (ri, 리) outside the capital are being upgraded and provided new facilities.  I am not sure what the procedure is for deciding which villages receive new homes, but it can’t be random.  Being located next to a major highway seems to be an important variable (keeping up appearances).  I am also unsure what the DPRK does with all of the displaced residents. Are they going somewhere else to live with their families?  Are they living in temporary shelters?

The Daily NK and Choson Ilbo also covered this story.

UPDATE 3 (2011 -7-5): Several days ago, Yonhap reported that the DPRK had quietly reduced its goal of building 100,000 housing units by 2012. So of the 200+ buildings that are currently under construction, which projects are priorities? Mansudae Part II for sure (see here and here).  But what else? There are many construction sites that were launched well before the second renovation of the Mansudae area was begun, and the deadline for completion is rapidly approaching.

Well North Korea recently broadcast a propaganda television show touting Pyongyang’s housing construction (along with quite a lot of singing).  I was able to match up this North Korean television footage with satellite imagery of Pyongyang construction sites to help answer this question.  Given the amount of propaganda being used to promote these particular developments, I would say the following three are also 2012 priorities:

Ryongsong-guyok, Chonggye-dong (룡성구역, 청계동)

Click on images for larger versions.  See in Google Maps here.

Hyongjesan-guyok, Sopho-2 Dong (형제산구역, 서포2동)

Click on images for larger versions.  See in Google Maps here.

Rakrang-guyok, Tongsan-dong (락랑구역, 동산동)

Click on images for larger versions.  See in Google Maps here.

The DPRK also recently hosted an architecture expo in Pyongyang. I have uploaded a video of the event to YouTube, and you can watch it here. I was able to match up some of the projects (though not all) with current satellite imagery. Aside from the renovation of the Ryugyong Hotel, there is no publicly available satellite imagery showing that these projects have been launched.

Hyoksin Area (혁신)

Ryugyong Area (류경)

Additional Informaiton

1. So Marcus Noland was right.  They want tall buildings.

2. For several years now I have been tracking construction in Pyongyang.  See hereherehere, herehereherehere, and here.

UPDATE 2(2010-7-28): According to the Daily NK the construction has come to a halt:

The construction of 100,000 homes in Pyongyang has been put on hold due to a lack of cement. According to a Daily NK source, the project is around 40 percent complete.

The year’s aim is to finish 35,000 households out of the total 100,000 planned for construction. Work is due for completion by 2012.

The North Korean authorities had planned to construct 20,000 houses along the railroad from the Ryongseong-district via Seopo in the Hyeongjesan-district to the Ryeokpo-district and 25,000 houses in the center of the city. The schedule for laying the foundations has been set for September this year with plastering and interior works running until the end of the year.

The frame work of the houses, expected to finish by September, have been suspended due to lack of cement and other materials. A source commented that, “It was planned that general construction of frame works would finish in September but exterior construction has been halted due to a lack of materials.”

The North’s authorities have attempted to supply materials through the Sangwon Cement Complex, the Chollima Steel Mill Complex and other factories across the country. Annual production of cement in North Korea amounts to 6.4 million tons, approximately 12 percent of South Korea’s. However this is not enough to fuel general construction of key facilities such as social infrastructure and military facilities.

Large scale power plant constructions such as the Heecheon Power Plant combined with the building of 100,000 houses in Pyongyang have meant the shortage of cement is particularly acute.

Last year the North established the Pyongkeon Development Investment Group, attracting 320 million dollars of foreign capital. According to the plan submitted by the Group, 300,000 tons of cement are needed for foundation work in March alone.

Chosun Shinbo, the publication of the Chongryon (General Association of North Korean Residents in Japan), reported the construction of 35,000 houses was started in September last year. Since then, old houses in the districts have been torn down and neighborhoods rezoned. In March, the foundations of the houses were laid and the exterior frame work was built but construction has made little progress throughout June due to low cement levels.

The 100,000 household construction project in Pyongyang has been led by Jang Sung Taek, Director of the Ministry of Administration of the Workers’ Party, later appointed as the Vice-chairman of the National Defense Commission earlier this year at the Supreme People’s Assembly.

A source reported that, “Jang Sung Taek ordered foreign currency earning organizations to procure cement and that even selling coal should be considered.”

North Korea launched the state project to construct 100,000 houses in Pyongyang as a symbol of completion of the strong and prosperous state as part of a three-year campaign. Additionally, this project has been advertised as an achievement of the successor, Kim Jong Eun. If the plan fails then it will be a blow to the succession. If construction is suspended completely in advance of the Delegates’ Conference, happening in September, the image of Kim Jong Eun could be damaged.

UPDATE 1 (2010-5-2): Pyongyang’s 2012 renovations

Barbara Demick, Los Angeles Times correspondent and author of the very interesting and enjoyable Nothing to Envy, was the first western journalist to write about Pyongyang’s construction boom and the DPRK’s goal of achieving a strong and prosperous nation  by the time of Kim Il-sung’s 100th birthday in 2012.  The article is a bit dated, but I thought it would be fun to go back and point out all of the construction projects she mentioned in Pyongyang (plus a few more).

Below are some blurbs from Demick’s article supplemented with satellite imagery:

Blurb 1: “Yet these days, high-rise apartments in shades of pink are taking shape near the Pueblo, the American spy ship captured in 1968 and still anchored in the river. A tangle of construction cranes juts into the skyline near Pothong Gate, a re-creation of the old city wall. About 100,000 units are to be built over the next four years.”

I have already blogged about the new housing near the Potong Gate (see here).  Here is the housing near the Pueblo (click on images for larger versions):

pueblo-housing-4-6-2005.JPG  pueblo-housing-11-12-2006.JPG  pueblo-housing-1-28-2009.JPG

The dates of the pictures are 4/6/2005, 11/12/2006, 1/28/2009). The original Los Angeles Times story had a picture of the completed building but that does not appear to have been archived.  Kernbeisser got a photo of the building under construction.

Blurb 2: “But South Korean companies and individuals have mostly ignored the political chill. Among the biggest players here are a unit of the Hyundai conglomerate, which operates the resort where the shooting occurred, and companies affiliated with the Rev. Sun Myung Moon’s Unification Church, which also runs a car assembly plant in North Korea [Pyonghwa Motors]. The church last year completed work on what it calls the World Peace Center, behind the Potonggang Hotel, also owned by church affiliates.”

You can see a satellite image of Pyonghwa Motors plant near Nampo here.

Here is an image of the Potonggang Hotel.

Here is the World Peace Center.

Blurb 3: A Chinese company, meanwhile, is renovating the No. 1 Department Store in the heart of downtown.

Here is an image of Department Store No. 1.

Blurb 4: The Taedonggang Hotel, where Soviet dignitaries stayed in the 1960s and which burned down in 2002, is being restored as a five-star hotel. The Pyongyang Grand Theater, which stages revolutionary operas, is under renovation. The oldest and most elegant of the city’s movie theaters, the Taedongmun Cinema, was restored over the summer and used for screenings at the Pyongyang International Film Festival, which opened here last week.

Here are satellite images of the Taedonggang Hotel reconstruction:

taedong-hotel-8-6-2005.JPG taedong-hotel-11-12-2006.JPG taedong-hotel-12-26-2006.JPGtaedong-hotel-1-28-2009.JPG

Kernbeisser offers a great visual contrast between the hotel’s past and future. Click the links for images.

Here is an image of the Pyongyang Grand Theater under renovation.

Of course these places only scratch the surface of construction work in the DPRK in the last few years. I started to make a list of construction and refurbishment projects, but it got very long very fast.  Since I have other things to do on this lovely Sunday afternoon you will have to wait for me to get around to it at a later date.

ORIGINAL POST (2009-10-20): According to KCNA:

General Secretary Kim Jong Il went round newly-built apartment houses in Mansudae Street.

Saying that the newly-built apartment houses of new styles in the street are the most modern ones which fully reflect the plan and intention of the Party to provide the people with the best living conditions, he added that those apartment houses in the street serve as a model and standard for building dwelling houses to be used by all the people in a great prosperous and powerful nation.

He said that it is necessary to build in Pyongyang modern flats for 100,000 families, houses similar to those apartment houses standing in Mansudae Street, in a matter of a few years as an immediate task.

He expressed great expectation and conviction that all builders of the capital city would create new “Pyongyang Speed” in the era of Songun in the construction of the capital city and usher in “an era of prosperity of Pyongyang” in the new century just as the people created the world-startling “Pyongyang Speed” in the 1950s by building a flat for a family in just 14 minutes true to the Party’s policy of prefabricated construction after the war and as the people in the 1970s and the 1980s opened up “an era of prosperity of Pyongyang” by building many modern streets and great monumental edifices in a matter of 15 years and thus demonstrate once again to the whole world the revolutionary spirit of the service persons and people of the DPRK, successors to the great history and tradition.

 

The goal of constructing 100,000 flats has been repeated in KCNA since then: December 5, 2009, January 22, 2010, February 6, 2010, March 18, 2010.  In KCNA they have been careful not to declare a specific deadline for completion, but (thanks to a reader) in the monthly magazine Korea they have set Kim Il-sung’s 100th birthday in 2012 as the date.

I have blogged about and mapped the construction on Mansudae Street.  You can see the inside and outside of these buildings here.

So where will all these flats be located, and what does the construction look like? Below I have posted a GeoEye satellite image from Google Earth which highlights the residential construction areas (in yellow).

 

100-thousand-housing-overview-thumb.jpg

Click image for larger version

So it looks like the majority of the residential construction will be located in Hyongjiesan-kuyok (형제산 구역) in the north and Rakrang-kuyok (락랑 구역) in the south.

According to the June 7, 2010 DPRK evening news, it looks like soldiers are involved in the construction.  No surprise there.  It is unclear how many are involved.  Based on the image below I will let the “professionsals” determine which brigades are involved in the work:

 

construction-worker-2010-6-7.jpg

According to the same evening news broadcast, it looks like the workers have reached the second floor of at least one of these construciton areas.

As with the post-explosion reconstruction of Ryongchon (see images here),  the North Korean government is tearing down traditional, single-family houses and building “modern” high-rises in their place.  At this point the status of the former residents is unclear. Have they been moved into temporary housing (assuming they will get new flats once they are completed) or have they been permanently relocated to make room for the 100,000 lucky families?  (This method of residential development reminds me of Ceauşescu’s Romania.)

4-10-2009-py-housing-thumb.jpg

12-20-2009-py-housing-thumb.jpg

Click images for larger versions.  Top: April, 10, 2009  Bottom: December 20, 2009

Looking at the urban geography of the area I get the feeling that Jane Jacobs would be very disappointed.

 

hyongjiesanhousing-2009-thumb.jpg

Click image for larger version (rotated 90 degrees  –  so “north” is on the right, “south” on the left)

It seems like the new residents of the northern part of Hyongjiesan will be de facto residents of Sopho even though the railway line makes them separately distinct neighborhoods.  Sopho offers the closest train station and market. Residents at the southern end of the Hyongjiesan housing project will need to use a smaller market near the Sopyong Train Repair Factory (See satellite image here) and the West Pyongyang Railway Station.  Although the railway line defines the eastern border of Hyongjiesan District as of today there are only two places where commuters may cross over the tracks—at the West Pyognyang and Sopho Railway Stations. The distance between these two railway crossings is 3 miles (4.82 kilometers).

As of now, it appears there is little industry and few schools this far out of the city, so it is probable that most of the residents will be commuting into town.  However, none of the new housing is metro accessible.  Sopho receives bus service and the West Pyongyang Station receives bus and tram service. However the bus from the West Pyongyang Station to the Sopho Station lies to the east of the new housing and is separated by three miles of railway.  Adding more bus stops between the two stations and providing more railway crossings from the east side to the west side of the tracks would be very helpful in reducing the amount of walking residents would need to take. Somehow, I do not think that will happen.

As for the buses, with only one line to service 100,000 families look for them to be crowded.  It is possible that a commuter rail-line could easily transport workers to the center of town (like in Hamhung), but that might be wishful thinking at this point.

And finally, although the 100,000 families that do end up living in these homes will theoretically enjoy newer, higher-quality housing, their movements in and out of the buildings can be more easily monitored by inminban (인민반) than those in the single-family homes. In the traditional single-family homes there are multiple avenues to enter and leave the neighborhood, but when everyone uses the same door to enter and leave, residents’ activities can be more easily monitored.

So why not build more high-rises in the center of town where people actually work? These kinds of planning snafus are reflected in most socialist cities and are (unfortunately) predictable. To learn more about the urban economics of planned cities, I recommend not just  Jane Jacobs but also “The Urban Dimension of the North Korean Economy: A Speculative Analysis” by Bertrand Renaud.  Read his full chapter here.  Lots of good stuff from them.

Share