Chinese make up 80 percent of housing buyers in Jeju Island

South Korea's Jeju Island has attracted Chinese real estate ventures in recent years, due mainly to its geographical location, immigration policy and housing prices.

Geographically close to China, Jeju is convenient for commuting from cities in northern China. It is a one-hour flight from Shanghai, two-and-a-half hours from Beijing.

In February 2010 the South Korean government launched a new immigration policy: Immediate families of those who invest US$500,000 buying property in Jeju Island are eligible for permanent residency after 5 years; and enjoy the same medical treatment, education and employment as South Korean citizens.

Zhang Ping, general manager of the Insite Group research center said the change in immigration policy saw housing prices and supplies increase dramatically. But prices are still much lower than China's first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen, hence more than 80 percent of buyers are from China.

After regulatory measures were introduced in Hong Kong and Singapore, Chinese buyers shifted their focus to places in Europe and America, according to Lin Wenhao, senior director of Knight Frank real estate consultancy. At that time Jeju Island was a tourist attraction with few Chinese buyers.

But the trend began to reverse in recent years as the housing price of hot areas in Europe and America rose, while Jeju Island remains comparatively cheap.

Zhang said property in Jeju will remain attractive with a good environment and climate, and investment of big developers matching facilities with schools, hospitals and nursing homes established.

But she pointed out that the rate of investors' residency in the place is low, most of whom live like migrant birds, spending only vacations there. Zhang estimated that with the trend of developing new housing estates cooling down, investors who expect to sell for profit may face difficulties.

Another reason real estate businesses are keen on investment in South Korea may be cultural, , according to Jin Wei, executive of CBRI Asia-Pacific research department.

But Jin warned that one cannot copy success from one overseas city to another. He said the casino businesses Chinese investors have shown interest in is a totally different thing from commercial estate.

Property developers have accumulated experience in building houses but they lack experience in operating and managing casinos, which will be their biggest problem, said Lin.