Pyongsong’s nouveau rich seek fortunes elsewhere

The ownership, construction, and sale of housing in North Korea has become largely governed by market forces. The official policy of state ownership of housing is no longer in sync with reality, with most residents now assuming they own the houses they live in.

Donju (the nouveau rich) are at the forefront of large apartment construction projects, as well as the real estate businesses in North Korea. Donju view apartments as personal financial assets and have traditionally preferred premium apartments that can sell for hundreds of thousands of US dollars in North Korea’s major cities.

Recently however, a number of donju have sold their premium apartments and moved out of the cities to more pleasant natural environments. The new real estate trend involves donju buying single-family homes on the outskirts of major cities.

According to a source in South Pyongan Province, at least five donju sold their apartments in the center of Pyongsong in South Pyongan Province from April to August this year and constructed two-story single-family houses on the outskirts of the city to live in.

Premium apartments in Pyongsong go for around 100,000 US dollars. The most expensive ones are located near the city center, where most of the government institutions and schools are located, and those close to Pyongsong Station.

The donju reportedly sold their premium apartments in the city and moved to houses in Hutan-ri, approximately four kilometers away from the city. The area is scenic, with a mountain and a river flowing nearby. The locations of the houses are considered ideal according to the Korean concept of feng shui, with the houses located with their backs to the mountain and facing the river.

The donju received permission to rent the land from the authorities and the houses reportedly cost 20-30 thousand US dollars to build, while the interiors cost 10-20 thousand US dollars to fit out. The rental costs for the land were cheap, at around 500 US dollars.

The North Korean authorities generally permit donju to collect excess profits from the sale of the houses along with real estate fees, provided they pay taxes and other fees associated with the land being under state ownership. The state takes away, at most, 10% of the profit earned [off the sale of the houses]. Costs associated with the sale of houses in the outskirts of the city are much lower than those in the city proper.

The area the new houses built by the donju are in allows for quick travel (10-15 minutes) to Pyongsong-dong, Tuksong-dong, and Jungduk-dong, the central districts of Pyongsung.

As North Koreans view premium apartments typically located in the city as symbols of wealth and status, the fact that these donju have left the apartments [in the city] means that they may be perceived to have lost social status.

However, the online shopping and food delivery industries have become more developed in the country and donju have both cars and housekeepers so they face few difficulties in being located far from the markets, a separate source in South Pyongan Province told Daily NK.

The wealth and influence the donju have has grown to the extent that they face relatively few difficulties in their daily lives [despite their distance from the city center]. It also means that the societal status of the donju has risen to the point where they can focus on enjoying life rather than worry about perceptions and image.

The move from the city center indicates that North Korea’s trend toward “privatization” is likely here to stay. It will be difficult for the authorities to forcibly remove anyone from a specific apartment or take away their ownership of an apartment when the donju have received permission from municipal or provincial People’s Committees to build and sell apartment complexes.

That being said, there are cases in which government officials use corrupt methods to confiscate or transfer the “right-to-residence” of single-family homes built on the outskirts of cities. That five donju have moved to such an area means they are likely confident their homes will not be taken away.

“The donju, who have long monitored the policies pursued by the authorities regarding real estate, now seem to trust [the continuation of] these policies,” said Eul Chul Lim, a researcher at the Institute of Far Eastern Studies at Kyungnam University.

“That they are moving to the quiet, less built-up outskirts of the cities and building houses that fit their own preferences means they are focused on enjoying pleasant lives.”