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Chinese investors gain important foothold in Jeju’s property marketChina’s ‘one house policy’ and soaring prices mean Jeju has an exotic pull for investors |
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| ▲ Chinese investors review property development packages earlier this year. Photo courtesy Raon Private Town |
It may be the most significant move yet in Jeju’s aggressive “Buy Jeju” campaign to attract investment from abroad. One mainland Chinese investor who purchased a resort condominium worth 1 billion won ($900,000) has been awarded permanent residency status, the Jeju provincial government announced on Oct. 27.
The granting of the permanent visa could have far-reaching consequences on Jeju’s future investment outlook. For more than 100 Chinese property shoppers who recently signed a massive deal with Jeju developers to buy a resort condominium unit, it may act as a strong boost to complete the purchase and gain the residency visa.
A resort town developed by Raon, a Jeju-based development firm, had a problem selling the properties to locals earlier this year, but has since unloaded all of its inventory to Chinese investors. Raon has attracted some 53.65 billion won ($45.2 million) worth of provisional contracts with Chinese investors since May.
The investors are known to be mostly professionals, including private business owners, real estate agents, retired public employees and doctors, who are seeking luxury second homes and also good value overseas. Other local developers such as Bokwang are also active in trying to entice the wealthy and super-wealthy Chinese.
An investment presentation held last month in Shanghai, China, by Bokwang to sell the luxurious Phoenix Island resort, won a wave of favorable attention from more than 100 crucial investors. More roadshows targeting Chinese shoppers are set to be held in Jeju before this year ends.
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| ▲ Groups of visitors from China hear about the properties on offer on Jeju Island, earlier this year. Photo courtesy Raon Private Town |
“Chinese clients are cash-rich,” said a Jeju provincial government official. “They are the biggest targets in both the investment and tourism industries of Jeju island.”
“With China’s ‘one house policy’ and prices soaring at home, the exotic pull of the beautiful resort island might be too strong for them to resist.”
Although wealthy Chinese are also becoming more active in the American and European real estate markets, Jeju island remains highly popular for them for a variety of reasons, the official says.
Unlike other regions in Korea, it is easy to get permanent residency in Jeju. “That’s a strong magnet,” the official emphasized. In February this year, the Ministry of Justice revised the immigration law to grant the right of permanent residency or a renewable F-2 visa for foreign investors.
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| ▲ Photo courtesy Raon Private Town |
Under this law, foreigners who purchase a resort unit worth $500,000 or more can gain this citizenship for 5 years. If the value of the unit exceeds $500,000, the rest can be used as a mortgage or loan. With the F-2 visa, investors and their families can receive many of the same benefits as Korean citizens, such as school admission and medical insurance.
These units range from condominiums and luxury villas to private lodges designated by the Jeju provincial government. After 5 years of residing in Jeju (as long as no criminal violation has been committed), foreign investors and their family can get Korea residency or an F-5 visa.
With its status as the nation’s only international city, Jeju offers visa-free entry, lower taxes and less strict business regulations, which is also attractive to buyers seeking income from their properties.
China’s latest changes in property policy — especially higher prices on house purchases, stricter lending rules for property developers, and limits placed on investors buying more than one house — also make its investors favor the acquisition of Jeju addresses.
Many wealthy Chinese do not feel secure in their home country as they fear the Chinese government may impose more restrictions on local property markets. Whenever there is a chance, many wealthy Chinese are looking to “...hide money abroad,” according to a local daily.
In this respect, Jeju offers a convenient Plan B.
Jeju’s natural appeal, together with the fact that much of Asia is now beginning to recover rapidly from the global financial crisis, makes the island an extremely attractive place for investors. Furthermore, flying to Jeju is only about one hour from Shanghai and 2 hours from Beijing, a great deal closer than Taiwan, Hong Kong, Macau, Singapore, and Hainan Island.
Not surprisingly, Jeju island is adapting to meet the Chinese demand. The Jeju government is in the process of devising a collaborative plan to build several new restaurants which exclusively cater to Chinese visitors. Chinese language institutes are busier than ever and tourist visas to visit Jeju have been exempted since 2006.
Along with the new permanent residency policy, the Jeju government is making further efforts to implement deregulation laws as a way of promoting investment incentives. However, it is merely the first step. It’s too early to pop the champagne.
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