JEJU, April 11 (Korea Bizwire) - If you think of Jeju Island as just a laid back vacation spot or a place for fishermen and tangerine growers, give it a second look.
This southern resort island known for its scenic beach and volcanic landscape has drawn a huge influx of Chinese travelers over the past five years thanks to visa-free entry for up to 30 days and the rising popularity of Korean pop culture.
It has also become a popular asset shopping list for cashed-up Chinese investors after the self-governing province in 2010 adopted an accommodative visa policy that grants permanent residency to anyone who invests in real estate worth 500 million won ($433,699) or more and hold it for at least five years.
With a series of mega projects currently under way, the island spanning 1,848 square kilometers with a population of about 600,000 has lured a second wave of cash inflow from local investors seeking an alternative real estate magnet amid low interest rates.
As a result, a rising number of affluent, highly educated Koreans have settled into a new life on the once-sleepy island to work and educate their kids in a clean, exotic environment.
So this is what you’re most likely to hear from property developers and condo sales people: “By the time you think it’s time to invest here, it’s already too late.”
For corroborating evidence, the construction banners and tall tower cranes frequently spotted in lesser developed areas and recent data could give a glimpse into the latest market situation.’
The average price of land on Jeju Island jumped 19.35 percent last year, the highest in the nation and 4.4 times more than the national average, according to data by the Ministry of Land, Infrastructure and Transport.
Among them, foreigners owned 2,430 buildings covering 356,669 square meters at the end of December, with 94 percent being Chinese nationals, the provincial government data showed. A total of 1,285 residential visas were issued for 1,580 households worth 1.95 trillion won as of September, with most of them also being Chinese nationals.
“The Chinese have the largest pool of investment across the world right now, and their investment has lifted up the local real estate market thanks to the open visa policy,” said Kim Dong-han, a public relations official at the Jeju Free International City Development Center (JDC), an investment arm under the land ministry. “The industrial complex and international campus have also drawn the interest of domestic investors and more houses will be needed to accommodate the increasing number of new residents and employees in the near future.”
Currently, many of the large-scale development projects in Jeju are being pushed by Chinese companies or joint consortiums involving Chinese.
Genting Singapore Plc, Southeast Asia’s largest casino operator, joined with Hong Kong-listed Chinese property company Landing International Development Ltd. to build a $2 trillion resort complex with a foreigner casino, shopping center and a theme park.
The first phase of the project, known as “Resort World Jeju,” is due to open next year, and the entire development is to be completed by 2018.’
China’s state-run property developer Greenland Group has been constructing a health care town in Seogwipo on the southern coast after the South Korean government in December approved its plan to open the nation’s first for-profit hospital for foreigners.
The Shanghai-based company said it plans to inject 77.8 billion won into the project that includes residential condos, beauty-related treatment and advanced medical services, targeting wealthy Chinese nationals.
Greenland Group is also pushing for another 700 billion won project to build the island’s biggest building, called “Dream Tower,” in partnership with Lotte Tour Development of South Korea.
China State Construction Engineering Corp, one of China’s largest construction firms, was chosen to build the 38-story building with a casino, duty-free shop and luxury apartments in the downtown area close to the airport.
Construction is expected to start in May and the project is scheduled to be completed by early 2019.’
“The real estate prices in Jeju are expected to rise in the next five years. Chinese investors buy whatever they want because they offer much higher than market prices. And they pay all in cash like it’s not a big deal,” Chun Myung-jin, a real estate manager in Seogwipo, said. “With that money, local residents can sell it and go somewhere else to buy several pieces of property. For them, it’s better to sell it while they can.”
Jeju’s construction of medical and education facilities for foreign investors is a big appeal for Koreans who are considering living or doing businesses here.
The local government has created a venture industrial complex near the airport with the support of the central government, offering tax benefits and other incentives to IT and bio tech companies. Kakao Corp., South Korea’s top mobile messaging application company, also has its headquarters in the complex.
Another catalyst for their relocation is elite schools, which teach course work all in English with native-speaking faculty.
Currently, there are three global campuses for primary and secondary schools in the district dubbed the “Jeju English Education Town” — Korea International School in Seoul, North London Collegiate School from Britain and Canada-based Branksome Hall. St. Johnsbury Academy, a private American boarding school, will open its campus in September next year.
JDC said it has been seeking ways to attract prestigious global campuses to make Jeju an international education hub like Singapore, with a bill pending in parliament to lower hurdles for the operation of foreign colleges.’
“As affluent families can send their kids to these private schools, stores have had good businesses here. It is not uncommon that the pizza shop receives an order for dozen boxes of pizza for several classes at a time,” said Choi Jae-yong, a real estate office manager near the English education town in Seogwipo region. “Several people from Seoul have asked for information about opening a new bakery, convenience store or other stores after hearing they can have a stable profit in a less competitive environment.”
In February, a 133-square meter upscale apartment near the Jeju city hall in downtown was sold for 850 million won, marking the highest residential price. It is even more expensive than an apartment of same size in western Seoul, which traded for around 700-800 million won.
While domestic investors buy mostly apartments and houses, Chinese investors were more interested in residential condos and partial assets of resorts.
“I’ve visited Jeju several times for travel and am now thinking of investing in some condos up for sale by Chinese developers,” said a Chinese traveler from Shanghai staying in one of hotels run by a Chinese asset developer. “Real estate prices in Jeju are much cheaper than the mainland, and it’s also good to have a residential visa from Korea.”
In response to the growing number of visitors and residents, Jeju plans to build a second airport on the eastern coast, just south of Seongsan Sunrise Peak, to complement the existing one on the northern coast. The number of passengers using Jeju International Airport has risen from 11.3 million in 2005 to 23.2 million last year, the transport ministry said.
The ministry plans to start construction as early as 2018, with the goal of opening the new airport in 2025 when passengers are estimated to reach 40 million.
But not all welcome the inflow of Chinese money and new jobs, especially residents who worry about the increase of real estate prices and the destruction of the island’s pristine natural environment. Several lava tubes spread across the island, including Seongsan Sunrise Peak famous for its sunrise view, are designated UNESCO World Natural Heritage sites.
As concerns over aggressive Chinese investment rise, the provincial administration last year submitted a proposal to the Ministry of Justice to set limits on the type of land available for potential foreign investors in the leisure complex designated area. The bill is currently pending in parliament.
The large development projects mean more jobs and property taxes for the provincial government, but their ensuing relocation plan is like a bolt from out of blue for residents loyal to their deep family roots.’
Onpyeong-ri, a small village designated as the site for the new airport in November, was torn apart by the bitter tension, with several houses and town halls hanging out placards opposing the plan.
“I was so shocked when the government just announced the plan to build a new airport here, without even trying to persuade local residents in advance. Four generations of my family have lived here, and now the government unilaterally made a decision to demolish this town to build a new airport,” a 60-year-old local resident said, refusing to give his name due to the sensitivity of the issue. “I will fight to keep my house, but I’m worried that our voices are not heard.”