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Researcher: North Korea's real estate market is booming

By Wooyoung Lee
Researcher: North Korea's real estate market is booming
A general view of Sinuiju, North Korea, taken from across the Yalu River from the Chinese city of Dandong, Liaoning Province, China, April 6, 2013. Photo by How Hwee Young/EPA

SEOUL, July 2 (UPI) -- The North Korean regime forbids its citizens to privately own property. The state owns it, as well as any products created from the land's use as stated in its constitution.

The government assigns individuals where to live and issues the right to a home for a certain period, instead of granting private ownership.

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But an increasing number of individuals are purchasing and selling the rights for property use to others, a sign of expanding private ownership, according to Joung Eun-lee, research fellow of the Korea Institute for National Unification.

Real estate agents have also emerged to help people acquire the right for property use from the state and transfer it to others when they want to move, she said.

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"North Korea is having a real estate development boom right now," Joung said at a seminar on North Korea's real estate market last week in Seoul.

The strict state control over property has loosened in reality without any revision in the constitution yet, but thanks to the change of mood on the ground, North Korea is experiencing an unprecedented number of real estate development projects taking place in major cities, Joung said.

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"It has been the state or state-authorized agencies which can build a property, but now an increasing number of individuals have joined real estate development projects. Private real estate developers have also appeared," said Joung, whose main research area is the North Korean economy.

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North Korea experienced an extreme shortage of houses in the 1980s when the baby boomer generation started to get married. A North Korean defector told Joung an extended family lived in one small room and newlywed couples shared a one-bedroom home with in-laws, putting women under stress that resulted in miscarriages.

In the 1990s, houses emerged as a form of asset.

North Koreans began to be exposed to the market economy from Chinese markets in border towns. Such understanding in markets formed in the time when the country was hit hard by the worst drought that resulted in severe food shortages.

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Joung explained a lot of people left their hometown in search of food and money. That left many houses vacant and agents emerged to sell the empty houses to people who began to recognize houses as an asset.

Housing prices have jumped almost tenfold since the 2000s.

In 2014, the price for the most expensive house in Pyongyang was around $100,000, a jump from $20,000 recorded for the priciest house in the 1990s, according to Joung's research. Nowadays mid-range houses are sold for $50,000 to $60,000 in the capital city.

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"It was around 2012 when many buildings and houses are constructed in North Korea. It coincides with the time when North Korean leader Kim Jong Un held the power," she said.

The surge in the housing price encouraged people to invest in real estate.

Joung found out based on satellite images from 2012 to 2015 that an apartment complex was built where the biggest market of the town was once located in the northwestern city of Sinuiju.

"North Koreans say you don't necessarily need to have much capital to build a house. When you secure a great location and build the first and second floor, people start to bring cash to invest," she said.

The real estate boom has created a growing interest in home interior design, as well.

Residents in big cities hire contractors to renovate their houses and customize furniture. The rich purchase home appliances made in South Korea or Japan from Chinese markets.

"In the old days, food people eat was a factor that shows the gap between the rich and the poor. Now, It's what they use in the house and where they live," she said.

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