With the potential of Pyongyang opening up to the rest of the world, the Chinese city of Dandong on the border with the Democratic People's Republic of Korea (DPRK) is dealing with newfound interest by implementing new restrictions on housing prices.
The latest restrictions came into effect May 21. Home buyers who are not from the city or are locally employed, now have to pay a higher down payment for new homes in Dandong’s new economic development zone. Down payments must be at least 50 percent of the full price, and they cannot re-sell new homes in the new zone until five years after the purchase.
Dandong saw its home prices soar in April – up two percent month-on-month – topping 70 Chinese cities surveyed.
The price has been pushed up mainly by investors who are betting on the DPRK’s efforts to open up its economy.
From Dandong, the DPRK is within easy sight just across the Yalu River. A three-kilometer-long bridge links Dandong’s new zone with the DPRK.
However, due to UN sanctions, business opportunities with the DPRK as well as trade were never realized. Few people have moved into the new zone, and it's been called a “ghost town.”
Local real estate developers say the April home price rise is not a genuine presentation of the local property market.
“The local property market has been weak for years. Some smaller developers had to sell newly-built homes in the new zone at a price lower than 2,000 yuan (300 US dollars) per square meter," said Hua Shu, deputy general manager of one of the largest real estate developers in the new zone.
“In April, we did see more people checking out local properties, so some developers decided to bring their prices up to a level that actually covers their cost – around 600 US dollars per square meter,” Hua said, "It seems like a huge leap, but in fact, they are just getting back on their feet."
Hua added that it could take years before Dandong’s property market really sees the benefits from an open DPRK.
And local people are also skeptical. Some say it is still not clear at the moment, if home prices, including in the new zone, will continue to rise. Others say the local economy may only start to improve once DPRK’s development actually picks up.
