Comparisons of Cheha-dong in Sinuiju show an increase of large buildings and apartments complexes since 2015. Images: Google Earth
Apartment prices are falling in Sinuiju, a city through which an estimated 70% of Sino-North Korean trade passes, as the downward trend that began in Pyongyang spreads nationwide.
“The price of a luxury apartment (100 square meters) in Sinuiju’s Chaehadong area fell to 30,000 to 40,000 US dollars as of October 1,” said a Sinuiju-based source, adding that a square meter in the area is now worth 300-400 dollars.
According to a KOTRA report on the North Korean real estate market published in June this year, the prices of apartments in Sinuiju were 5,000 yuan (approx 720 dollars) per square meter. This suggests that prices fell more than 300 dollars per square meter in just four months.
North Korea’s real estate market saw an increase in prices for almost 10 years, but began to fall in August, and prices are now plummeting. Despite the trend, the supply of new apartments continues to increase, which has led to paralysis in the market with owners unable to sell their apartments.
“100-square-meter apartments that have just had their exteriors finished are going for 10,000 dollars, and those with completed interiors are going for around 30,000 dollars,” said the source. “So they are selling at deep discounts when compared with China.”
The current prices of Sinuiju apartments are similar to those reported by Daily NK in 2015. This means that after having steadily increased, apartment prices have fallen to the same levels as three years ago.
“My younger sibling’s family conducted business for a while but things didn’t work out so they sold their apartment for 30,000 dollars three years ago (in 2015) and moved outside the city. However, they had to pay the same amount of money last month when they bought a new apartment,” said a defector in South Korea who recently spoke to their younger sibling living in Nampo, South Pyongan Province.
“The price was so low and they thought it was strange. After asking around, they heard that apartment prices had fallen a lot,” said the defector, speaking on condition of anonymity.
The fall in real estate prices in North Korea is becoming a nationwide phenomenon. According to an investigation by Daily NK, the price of apartments (230 square meters) in central Pyongyang and those located near the Taedong River, which were once selling at around 200-300,000 dollars until June this year, had plummeted by more than 50,000 dollars by August.
The price of apartments in Pyongsong’s Jungdok-dong (neighborhood) and Yokjon-dong areas in South Pyongan Province reached highs of 100,000 dollars earlier in the year, but by the end of August they had fallen to 70,000 dollars, and there were some that were even going for 50,000 dollars.
North Korean sources say that the fall in apartment prices is due to a fall in purchases by mid- to large-sized business owners due to international sanctions, together with a liquidity crisis. The country’s economic stagnation has led to declines in both apartment purchases and demand for monthly rental apartments.
Moreover, the long-term boom in apartment construction due to the perception that apartment building is reliably profitable has partially fueled the crisis.
“An apartment block that began construction in June last year has been painted and the exterior was completed in August this year,” said a separate Sinuiju-based source.
“There are few differences in the structure or exterior of apartments here compared to Chinese ones,” added the source, suggesting that the level of construction quality has increased.
“The apartments built these days are spacious and the interiors are very modern. One family lives on each floor and the apartments include three rooms along with a foyer, and they are more than 100 square meters in size.”
He further explained that there are several places where apartments are being built in Sinuiju, with single-story houses being torn down to make space for new apartments that have businesses on the first floor with people living on the upper floors.
As the supply of new apartments increases despite the dramatic fall in prices, there are signs that the real estate market is facing long-term stagnation.
“If things continue this way, I’m not sure how many of us [construction contractors/companies] will survive,” he said.