Peace talks ignite land buying frenzy along South Korea's fortified border

SEOAM MACHINERY INDUSTRY

14/05/2018 24:00

* Property sales in border town of Paju double in Mar vs Feb
    * Public barred from access to DMZ but sales can be
registered
    * Mines, possible conservation restrictions among risks
    * For multimedia coverage of North Korea: https://www.reuters.com/north-korea/

    By Joori Roh and Cynthia Kim
    SEOUL, May 14 (Reuters) - Forget Seoul's posh Gangnam
district. 
    With North Korea pledging to reduce tensions and renew ties
with its southern neighbour, South Korea's hottest property
market is now along the heavily fortified border between the two
countries. 
    Demand for property in small towns and sparsely populated
rural areas around the Demilitarised Zone (DMZ) is surging on
expectations of an influx of people and investment. 
    Kang Sung-wook, a 37-year old dentist in the South Korean
border city of Paju, has bought eight separate lots of land in
and around the DMZ since mid-March. 
    Five were purchased without ever setting foot on them, using
only Google Earth satellite photos and maps, as areas inside the
 DMZ cannot not be accessed by the public.
    Kang said buying interest jumped so sharply as relations
between the former foes improved that he needed to move fast.
     "I was out looking since North Korea-U.S. summit news was
announced in March, and it looked like all the good ones were
gone already," said Kang. "I realized then that the market was
on fire." 
    His investment along the border now totals 3 billion won
($2.8 million) for 49 acres (20 hectares) of land. 
    
    RAZOR WIRE AND RESTRICTIONS
    For decades, the DMZ has been a different kind of hot spot,
the scene of sometimes deadly military provocations and daring
defections from the North.
    The zone, dotted with guard posts and strung with razor
wire, was established after the 1950-1953 Korean War. The two
Koreas still don't officially recognize each other and remain in
a technical state of war because the conflict ended in a truce,
not a peace agreement.   
    Over a million landmines were laid in border areas including
the DMZ and the Civilian Control Zone in the South, said Jeong
In-cheol, a landmine expert at National Park Conservation
Network.
    But while public access is restricted, land within the 2km
(1.2 mile) wide South Korean side of the DMZ and other border
areas can still be purchased and registered.
    Land transactions in Paju, gateway to the United Nations
truce village of Panmunjom, more than doubled in March to 4,628
from February, government data shows. That far outstripped
better known markets such as trendy Gangnam, where volumes were
up just 9 percent. 
    In the settlement of Jangdan-myun, home to Dorasan Station -
the last railway stop south of the border - transaction volumes
surged four-fold from a year earlier. Land prices there rose 17
percent over the same period. 
    Kim Yoon-sik, a realtor with 25 years experience in Paju,
says owners of the land in the DMZ include those who inherited
farmland from ancestors in pre-Korean war days and some long
term investors.
    "With bids outnumbering offers, I often see sellers
cancelling on preliminary contracts, it's that hot," Kim said.
    
    RAILWAYS AND CONSTRUCTION 
    The surge of activity along the border is not limited to
South Korea or just real estate. 
    In the northeastern Chinese border city of Dandong, property
investors are pushing up prices and even spurring buying
interest inside North Korea.  urn:newsml:reuters.com:*:nL3N1S94DV
    At last month's historic inter-Korean summit at Panmunjom,
North Korean leader Kim Jong Un and South Korean President Moon
Jae-in pledged to reconnect railways and roads along the border,
and transform the DMZ into a "peace zone".  urn:newsml:reuters.com:*:nL3N1S44MR
    China and South Korea have also agreed that if North Korea
undertakes complete denuclearisation, it should be guaranteed
economic aid. That could start with railway projects connecting
China and South Korea through North Korea.  urn:newsml:reuters.com:*:nS6N1PJ023
    Shares of South Korea's construction and railway firms such
as Hyundai Rotem  064350.KS  and Seoam Machinery Industry Co
 100660.KQ  have soared on hopes of such projects. 
    
    FALSE DAWN?
    But South Korea has seen this kind of excitement before.
    Border property prices spiked when former President Roh
Moo-hyun met with North Korea's Kim Jong Il in 2007. Prices then
plummeted as ties deteriorated when the right-wing government of
Lee Myung-bak took power a year later.
    "For the past seven decades, the two Koreas have taken
radically different paths," said Jhe Seong-ho, a law school
professor at Seoul's Chung Ang University. "Deregulating of the
border zones won't be a quick and smooth process even if there
is an economic opening up of North Korea." 
    Much of the land within the DMZ is likely to remain
restricted from any development for conservation purposes, a
huge risk for investors, he added.
    Hopes are high, however, with Kim set to meet U.S. President
Donald Trump in Singapore next month after his recent summit
with Moon and two trips to China to meet President Xi
Jinping. urn:newsml:reuters.com:*:nL1N1SH157
    "I have a firm belief that this time North Korea would
pursue an open economy like Vietnam," Kang said. "Kim Jong Un
wouldn't go everywhere and visit China twice if he was
bluffing."  

 (Reporting by Joori Roh and Cynthia Kim. Editing by Lincoln
Feast.)
 ((Cynthia.Kim@thomsonreuters.com; 822 3704 5655; Reuters
Messaging: cynthia.kim.thomsonreuters.com@reuters.net))