Talks Between Trump and North Korea may Boost Real Estate in Surrounding Areas
Today, President Trump and Kim Jong Un had a historic Summit in Singapore. The world watched as the two leaders shook hands, smiled, and talked amicably. This is not the first time world leaders have tried to engage North Korea diplomatically. As always, the focus today was on denuclearization. Nuclear issues have been a focus of the administration. Earlier this year, the U.S. unilaterally pulled out of the Iran deal. The President did make some remarks on other potential opportunities that could arise from an agreement with North Korea.
POTENTIAL REAL ESTATE
Despite having switched professions, it seems that President Trump is still keeping his eye out for real estate opportunities. Quartz News quotes Donald Trump as saying “As an example they have great beaches. You see that whenever they’re exploding their cannons into the ocean. I said, boy, look at that view. Wouldn’t that make a great condo?” He believes that North Korea represents an untapped market for real estate development.
The President is not the only one who has a vision for the future of real estate in North Korea. Leaders of North Korea have long hoped to tap into the resources the country does have. North Korea has undeveloped space, natural beauty, and an advantageous position in Asia. Since 1987, North Korea has been attempting to build a massive hotel in Pyongyang, one of North Korea’s special cities. As of now, the structure is complete but he building remains internally unfinished.
The government has not given up efforts. In 2017, Kim Jong Un announced plans to build a resort in Wonsan, a beach town in North Korea.
REAL ESTATE IN NORTH KOREA
Real estate in North Korea is fairly unique. Because they are a strictly communist country, its citizens do not own property. They are placed in apartments according to their status in the administration and in their work. There is a thriving black market where individuals bribe officials in order to be able to legally sell their properties. Oftentimes, owners move to China and sell their empty apartments.
Another unique aspect of the North Korean market is its hostility to foreign investors. Over the years, many ventures by China, Egypt, South Korea, and the U.S. have failed and been defaulted upon. Some of this is due to mismanagement. Another reason is that North Korea is very cautious of being beholden to other countries, or allowing capitalism to undermine their influence.
If the Summit is successful, this may change. Until then, it seems unlikely that the Trump Organization or any other American company could develop in the area.
Due to the Summit, however, real estate in cities surrounding has already seen a boost. A report by NPR highlights a border town in China that investors have flocked to because of talks. Dadong is the main crossing of goods into North Korea. Recently, hopes of a road built by China that will connect Dadong to Seoul has made housing prices rise by more than 50%.
All in all, if the Summit is successful, it could have far reaching effects for the world of real estate. The first meeting seems to have gone well, but has been unspecific in its achievements. Investors should, along with the rest of the world, keep an eye on what the future could bring.