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Chinese buyers drive Dandong real estate price surge

Dandong, the Chinese border city on the Sino-Korean political line, is seeing a surge in property prices since April 2018 amid booming interest from Chinese buyers.

Overlooking North Korea, Dandong New Zone on the bank of Yalu River is popular with mainland property buyers – many who wish to capitalise on its strategic position where three-quarters of China's trade with North Korea used to flow through the gateway before international sanctions.

Since March 2018, residential prices in several areas in the area have risen from 3,000-4,000 RMB per sq m to 6,000-7,000 RMB per sq m from 3,000-4,000 RMB. It is noted that some areas have reportedly increased prices at a rate of 300 RMB per day according to Global Times.¹
 

North Korea-China thaw points toward vibrant trade

Already, investors are projecting a return to healthy trade activities, thanks to an improvement in political relations between North Korea and China that has been fuelled by North Korean leader Kim Jong Un’s trip to Beijing, as well as his announcement to suspend nuclear missile tests in April 2018.

This is a welcomed reversal when the city experienced a housing glut, with prices of new homes declining 3.7 percent in March 2017 due to international sanctions.²

Dandong – a Tier-3 classification city in China – hopes to gain from future plans to develop a special ‘Border Economic Cooperation Zone’ for trade between the two countries.¹

Furthermore, while new property sales in Dandong have dipped slightly from March, it still performed higher than some Tier-1 cities like Beijing and Shenzhen. According to China’s national statistics bureau published in 16 May 2018, housing prices in Dandong increased 2% in a month from March 2018, posting large gains compared to other major Chinese cities.  

China imposes strict cooling measures

While this wave of Chinese real estate interest has made headlines worldwide, the Chinese authorities have been swift in taking action to regulate this burgeoning interest – the Chinese government is already looking to impose purchase restrictions directed at non-local residents, who mostly hail from Zhejiang and Guangdong.³

May 2018 saw a higher downpayment of at least 50 percent levied on property buyers applying for mortgages through the housing provident fund outside of Dandong.

Additionally, homebuyers will be prevented from flipping newly-built homes within two years of purchase as well.

This is no surprise, seeing as President Xi Jinping’s statement that "houses are for living, not for speculation" during the 19th Communist Party Congress last year has headlined China’s efforts to slow down soaring property prices.

That said, this is one trend that we will definitely keep an eagle eye on. After all, such opportunities are unprecedented, and both traders and investors alike will be quick to capitalise on this rare chance to delve into the North Korean market, thus giving property speculators the hope that one day, Dandong will enjoy wealth just like the Shenzhen economic zone.  

Sources: 1. Global Times: Real estate prices rise at China-North Korea border city; 2. Yahoo News: Property boom in China border town as world warms to N. Korea; 3. South China Morning Post: The ultimate in speculation? Chinese snap up homes in city bordering North Korea in bet Kim Jong-un will open country up