The real estate market in a strategic location of North Korea is heating up, with a recently new venture seeing apartment units being traded for up to
30,000 USD , the Daily NK has learned.
“Real estate development in Sinuiju City
has been pretty active since two years ago,” a source
based in the province told the Daily NK on Tuesday. “Starting
last July or August, construction for high-rises has been underway in the
Chaeha-dong neighborhood.”
The apartments in Chaeha-dong are being
built on joint investments from foreign currency-earning enterprises and the donjuLiterally "masters of money," donju refers to people who hav... More [the
new affluent middle class], according to the source. To clear the way for the
lucrative project, Chaeha Market, the largest distribution market in the city,
has been relocated to park grounds located in Namsang-dong.
While private property purchases remain illegal in
North Korea, beleaguered by economic hardship, the state dolls out tacit consent to these endeavors, encouraging increasingly more illicit trade within the burgeoning real estate market.
In areas like Sinuiju, a main portal to and from China, there is no shortage of solvent buyers eager and willing to pay for property in the area, knowing its value will only continue to increase. The apartments taking over the Chaeha Market grounds are modern buildings of roughly 100 square meters, constructed from materials exclusively imported from China. Situated in a prime location near Sinuiju Customs House, the complex offers convenient transportation options compared to other locations, warranting the relative high prices, according to the source.
Units in the complex come in three varieties, depending on their stage of completion: “If only the framework of the apartment is
put up, it is sold for 20,000 USD; if interior construction is completed, it
trades for 25,000 USD; and if decorative touches are added, it fetches 30,000
USD,” she explained. According to exchange rates in North
Korean markets on the 7th, 1 USD trades for roughly 8,000 KPW.
Labor for the cause consists of workers from
state-run enterprises and “8.3 Workers” with special expertise. The term, “8.3 Workers,” stems from a system where workers earn money outside
their state-mandated workplaces and present de facto tax payments back to their
employers but also keep a portion of the profits. In this case, the “8.3 Workers” are sectioned off into “8.3 Units” of five to eight people, tasked with plastering or putting down tiles in one unit within the residential
complex.
Regarding compensation for their work on the new building, “8.3
Groups” reach an agreement with the construction company, affiliated with a
foreign-currency earning enterprise, on rates and then work around the clock once ground breaks on the project. “Time equals money,” as the source said, adding that one worker is estimated to receive
roughly 30,000 [3.75 USd] to 50,000 KPW [6.25 USD] a day of work and is guaranteed rations and meals.
For investors, however, the project yields far more significant returns. “If an individual invests in one of these
companies’ real estate construction project, the
profits are divided up 3:7 and the investor receives a 30 percent share from
sales of the completed property,” the source explained.
DonjuLiterally "masters of money," donju refers to people who hav... More invest in housing construction
projects with these firms because they are unable to receive legal permission
from the Ministry of Construction to engage in such personal investments. Although donjuLiterally "masters of money," donju refers to people who hav... More
involvement in these undertakings has been known to sometimes take the form of loans offered to construction firms at
lofty interest rates, this method proves less
popular for the simple fact that there is less guarantee for them to receive what
they are owed; needless to say, no laws exist to protect these–by official North Korean
law–illicit transactions.
This fact propels most of the donjuLiterally "masters of money," donju refers to people who hav... More to invest in
the permanence and relative stability property offers, all while skimming 30 percent
of the overall profits from the sale; it is also why the source speculated this form of
investment to continue to gain traction.
She added that demand for news persists on with unhindered growth. Party cadres and the donjuLiterally "masters of money," donju refers to people who hav... More continue to purchase completed units; in fact, many even buying two or three units
using their relatives’ names to ensure future usage.
Meanwhile, residents of Chaeha-dong in Sinuiju are currently residing at the
Sinuiju Medical University dorms or at homes of their relatives. The source
reported that these temporarily displaced persons will be moving in, free of
charge, to the newly built apartments following their completion. She noted, however, that this contingent forms a disproportionate percentage to those who have purchased units within the complex.
