As marketization in North Korea spreads into the field of real estate, brokers have begun to capitalize on the business of buying and selling property. However, the emerging field has reportedly been rife with tensions, violence, and stand-offs, reports an inside source. With brokers able to charge high service fees in exchange for facilitating property sales, competition for clients has become a heated source of conflict.
“In Pyongyang, there is a fixed place under the rail bridge near the Taedong River and across from the riverside park where real estate brokers gather. The brokers have been fighting amongst themselves for clients, which has made for a tense environment,” reported an inside source from Pyongyang in a telephone conversation with Daily NK on February 10.
“A heated argument arose after one broker wandered over into another broker’s area and tried to lure their client away,” the source said. “Brokers collect a fee to act as the go-between for buyers and sellers, with a large profit to be made in a single deal.”
Cadres are allegedly happy with these developments, noted the source, because those without bureaucratic connections are unable to win in disputes over clients. As the fights escalate, the bribes that must be paid to cadres for each resolution get larger.
Making a quick profit in the real estate market is therefore not as straightforward as it may seem. In response, the brokers have begun including the anticipated bribery costs into their fee structures for clients.
“People approach brokers thinking, ‘We’re going to sell our house at a high price,’ but the brokers will try and convince them to drastically lower the price and charge them a significant commission. In the end, the biggest victim is actually the client,” the source explained.
Despite the circumstances, it is impossible for the buyers and sellers to do things on their own. It is illegal in North Korea to build homes on state property or engage in private real estate sales. According to the source, those who wish to buy and sell property without the assistance of a broker run the risk of forfeiture.
“I discussed this matter with a powerful cadre on the phone. He explained to me that cadres can buy and sell homes, but an ordinary person shouldn’t even dream about it. The brokers are connected to the State Security Department, the Ministry of People’s Security, and other law enforcement bodies. So ordinary citizens have no choice but to work through the brokers,” the source explained.
The emergence of real estate brokers is indicative of the progress that is occurring in North Korea’s services sector. Successful real estate advisers have become familiar with the business environment, and are thus able to match the client’s demands in consideration of preferences and affordability.
“The brokers have detailed information about sellers in their notebooks including addresses, phone numbers, and the quality of accommodation for sale. So when prospective buyers come to ask questions, they are really in their element. Customers with money to spare are shown places selling for premium prices, while those without much money are shown one-room apartments,” a source in North Pyongan Province added.
