Chinese nationals are emerging as significant players in the Gyeonggi Province real estate market. This year, the volume of real estate purchases by Chinese nationals in Gyeonggi Province is nearly seven times greater than that of Americans. The formation of a 'Chinatown' near industrial complexes in Gyeonggi Province seems to have increased the demand for dwellings for residential purposes.
According to an analysis by ChosunBiz of ownership transfer registration applications for real estate (buildings, land, and multi-family buildings) by nationality from January to July of this year, the number of applications for real estate purchases by Chinese nationals was recorded at 3,179 cases. This figure is 6.6 times higher than that of Americans (478 cases).
◇As people flock to find jobs, the demand for dwellings also 'soars'
The region in Gyeonggi Province with the highest number of dwelling purchases by Chinese nationals is Bucheon (621 cases). It is followed by Ansan (512 cases) and Hwaseong (395 cases), which also saw significant demand for dwelling purchases by Chinese nationals. In contrast, the demand in Gwacheon (2 cases), Uiwang (5 cases), and Hanam (10 cases) was low.
The areas where the demand for real estate purchases by Chinese nationals is concentrated are often those with established industrial complexes. As people flock to these areas in search of jobs and the Chinese community develops significantly, the demand for real estate purchases by Chinese nationals in these regions seems to be increasing.
For Americans, there was significant demand for dwelling purchases in locations such as Pyeongtaek and Seongnam's Bundang District within Gyeonggi Province. Pyeongtaek is an area with a U.S. military base, while Bundang District in Seongnam is regarded as a high-end area with home prices comparable to those in Seoul. Unlike the many Chinese who buy dwellings in Gyeonggi Province for residential purposes, Americans are focusing their investment demands on areas like the Han River belt.
◇China's real estate shopping is polarizing… Investment demand concentrates on luxury apartments worth hundreds of billions
The dwelling purchases by Chinese nationals appear to be polarized according to purpose. The total number of real estate purchases by Chinese nationals in Seoul and Gyeonggi Province is 3,728, among which the number of purchases in the three districts of Gangnam and Yongsan is 36. Only 1% of the real estate purchases by Chinese nationals in the country have been directed towards high-end areas.
This suggests that the demand for dwellings among those residing in the country who wish to secure homes is concentrated in areas like Guro, Geumcheon, and Yeongdeungpo districts in Seoul where jobs are concentrated, while investment demand is directed towards Gangnam.
According to listings introduced on Zhuai, China's largest overseas real estate trading platform, a property in Cheongdam-dong, Gangnam, 'The Penthouse Cheongdam (PH129),' is listed for 10.71 million yuan (approximately 2.09 billion won). Additionally, a high-end villa in Samsung-dong, Gangnam, where famous celebrities like Lee Jung-jae reside, is also listed for 5.1 million yuan (approximately 1 billion won). Moreover, a 265㎡ exclusive area unit in Acro Seoul Forest, Seongdong-gu, Seoul, is listed at 13.158 million yuan (approximately 2.58 billion won).
◇Investment is restricted, but residency is still allowed… Government regulations implemented
According to an announcement by the Ministry of Land, Infrastructure and Transport, as of the end of last year, the number of dwellings owned by foreigners in the country was 100,216, marking an increase of 5,158 units (5.4%) from six months earlier, surpassing 100,000 for the first time. By nationality, the highest number is owned by Chinese nationals at 56,301 units (56.2%). The proportion of dwellings owned by Chinese nationals among foreign-held dwellings has continued to rise, from 55.0% at the end of June last year to 55.5% at the end of December.
In response to the increasing real estate purchases by foreigners, the government recently raised the threshold for foreign nationals purchasing dwellings after concerns were raised that it 'does not align with fairness to locals' due to tightened lending regulations.
To curb speculative transactions by foreigners, the government designated the entirety of Seoul and some areas in the capital region as land transaction permission zones. Foreigners must obtain prior permission before purchasing real estate in these areas and are subject to a two-year residency requirement.
However, analysis suggests that most of the purchases made by Chinese nationals, which hold a significant share in Gyeonggi Province, are for residential purposes, and thus may not yield a restraining effect. Song Seung-hyun, the representative of the Urban and Economic Institute, noted that while there is substantial investment demand in areas like Seoul, regions like Bucheon, where Chinese nationals primarily purchase, are mostly driven by residential demand, adding that the designation of land transaction permission zones may not effectively impact foreign nationals who reside there.
He continued, 'Seoul has high barriers to entry, making it burdensome for actual residents, while Gyeonggi and Incheon have relatively lower barriers and higher residency rates, making it difficult to see effective outcomes. Moreover, while there may be some restraining effect on the investment demand among Chinese nationals, it is necessary to also consider measures to secure tax revenue when acquiring real estate.'