The Insane Kimchi Premium: Where It All Started
June 1966, Kim Hyeon Ok was just elected as the mayor of South Korea and was holding a meeting with the executives for planning out the Southern land of Korea. The land before them spread out 8km (miles) from East to West and 5km(miles) from North to South. After continuous meetings, what they discussed, planned, and executed became the bedrock of South Korea's extremely speculative land prices that made stock trading look like a Chihuahua. That same year, December 28th, an official statement from the Ministry of Land, Infrastructure and Transport announced that those land was confirmed for a land readjustment project.
And thus, the history of South Korea's most priced land, Gangnam, started.
Maljookgeori in late 1960s
Even until the official announcement, land was not even slightly considered as a speculative product and the word speculation in Korean which is '투기-Toogi' did not even exist in the Korean dictionary. However, in January 1966, when the Hannam bridge started developing, land prices skyrocketed. The below is a quote from a testimony of Son, Jeongmok, the chief of the Department of Urban Planning:
""Nobody knew that the 3rd Han River Bridge would be the catalyst of the so-called"Maljookgeori Legend" that skyrocketed land prices in Gangnam; not even President Park Chung-hee, Mayor Yoon Chi-young, and Hyundai E&C who were in charge of the construction."
Now, let's take a look what Maljookgeori(which means, Horse food street, the most priced real estate known as Gangnam today) Speculation is.
The History of the Infamous Maljookgeori Speculation
Land prices per 35 square foot in Banpo Seoul in Korean Wons(KRW)
In 1965, Maljookgeori was full of fields and paddies. The only town that existed was a small grass town near to the Education and Culture Center. However, rumors of making quick money started to spread in 1966 with the city of Seoul announcing their development plans. The realtors in Maljookgeori didn't even have roads in front of them entailing people to walk all the way through the paddy fields. According to Kim, Eunsook (65), Maljookgeori land price was 300 KRW (27 cents) per 35 square foot and in 1969, after the Kyeongbu expressway was built, land prices rose to 6000 KRW (6 USD).
Now, prices near to Yangjae station in Gangnam is peaking 60 million KRW (60,000 USD) per 35 square foot. This means that land prices rose 2 million x in a period of 40 years.
So, does this mean that the Gold Rush like speculation of land prices are now over?
No, land real estates are speculated repetitively with Newtown developments and business complexes being planned, confirmed, built, and initiated.
For example, land prices near to Cheonan/Asan Station was 50,000 KRW (50 USD) in 1996, along with the official announcement, land prices started crawling up and skyrocketing 800 times to 40,000,000 KRW (40,000 USD) by 2002.
Land prices near to Jijae Station was 500,000 KRW (500 USD) and in than 3 years, land prices rose to 15,000,000 KRW (15,000 USD) entailing a 30x investment profit in a span less than 3 years.
History of Korean land speculation is written each day with the country voraciously expanding and businesses consuming upon opportunities. Korean land real estate agents such as myself, are just loving these times and invite you to participate as well.
In the next episode, I will be going more in depth with strategies of how to get in at the right time with the right analysis, along with that, I will be writing a post with a guide to foreigners investing in Korean lands.
Question below if you have any ;)
Happy crypto, and Happy land investments :)
Chel Kim, VP at JS Development & Investments