Property prices soar in Chinese city bordering North Korea

The Downing One residential project is seen in the Dandong New Zone, in Dandong, Liaoning province.
The Downing One residential project is seen in the Dandong New Zone, in Dandong, Liaoning province.PHOTO: REUTERS

BEIJING - Property prices in the city of Dandong have skyrocketed since North Korean leader Kim Jong Un visited Beijing in March, Chinese media reported.

Housing prices in Dandong, in Northeast China's Liaoning Province, have risen from 3,000 yuan (S$629) to 5,000 yuan per square metre and those in some areas even doubled, the Global Times said.

Housing prices in Xincheng district, a new housing area on the outskirts of Dandong, jumped 57 per cent overnight, according to a report in the Securities Times, China Daily reported. Dandong is right across the Yalu River from Sinuiju, North Korea.

"Dandong is China's largest border and trading city with DPRK, with over 70 per cent to 80 per cent of that trade volume going through Dandong," said Lyu Chao, a researcher of border studies at the Liaoning Academy of Social Sciences, referring to North Korea's official name, the Democratic People's Republic of Korea.

"Housing prices in Dandong have always been a reflection of the China-DPRK relationship. People's confidence in future trade is growing. It is certain to say the trading relationship will become better," China Daily reported Lyu as saying.

A Dandong businesswoman, who declined to give her full name, told the Global Times: "Apartments overlooking the Yalu River were not profitable at all in the past, but as buyers began to flood in and prices rose, real estate developers stopped giving out discounts."

On the website of real estate agency, an article outlined a popular rumour that as North Korea reforms its economy, Dandong might turn into another Shenzhen, the Chinese mainland boom city near Hong Kong. The article encouraged people to buy property while prices are low.

The volume of property deals is also reportedly increasing.

The number of new applications has sharply risen beyond their processing limit of 260 a day, the real estate registration centre of Dandong said in an April 25 notice released on the website of its parent organisation the Dandong Municipal Bureau of Land and Resources. The centre asked house buyers to make early appointments.

But a government employee from the registration centre denied the rising trade had anything to do with North Korea.

"Several communities in Dandong happened to finish construction recently and the buyers are now heading to the centre to complete their transactions in groups," the employee, surnamed Zhang, told the Global Times.

Most of the buyers were local, the employee said, and denied widespread speculation that outsiders were flooding into the city buying up property.

Yuan Xiaoyu, marketing manager at Friend Plaza Hotel in Dandong, also felt uncertain if the boom is related to the recent warming of ties.

"Hotel rooms are experiencing high demand and prices have gone up, though it is hard to say whether it's related to visiting property hunters or seasonal travel," Yuan said.

Liang Qidong, assistant dean of Liaoning Academy of Social Sciences, said prices in Xincheng district have been low.

"The real estate market in Dandong has not performed well in recent years, especially in Xincheng district, which is too far from the centre of town, making locals not so interested in it. Now the DPRK has shown optimistic signals and the local developer started to seize the opportunity," China Daily quoted Liang as saying.

Lyu cautions that Dandong has previously seen similar short-lived property price jumps.

"When the New Yalu River Bridge was built, housing prices in Xincheng district soared. But the bridge has not yet been put into operation, and prices dropped back again," Lyu said. Construction on the bridge started in 2011, but while it is mostly complete, it sits unused.