Factory Site Land Prices Soaring

“Because this area has been designated as a residential area, we have to move again after only four years. It’s difficult to find a near-by area because of the soaring land prices here.”

Mr. Park, a supplier of mobile phone parts to LG Electronics, is greatly concerned about moving his manufacturing plant once again. He moved here in 2003 when his previous manufacturing site had been designated as part of the Dongtan 1 New City, Hwaseong, but he has to find another place to move his manufacturing facilities to.

With the introduction of the “Factory Location Limit System of the Seoul Metropolitan Area” law and the development of new cities, real estate prices for manufacturing sites are increasing. As prices in some areas have already surpassed 5 million won per 3.3m², some say that it is no longer competitive for companies to build factories in the metropolitan area.

Real Estate Prices for National Industrial Complexes Go Up 50%-

According to the Ministry of Construction and Transportation yesterday, the nationwide accumulated property price hike for the year through September stood at 2.7%. By use, the price of manufacturing sites (3.19%) went up the most compared to land used for residential (2.84%) or commercial (2.47%) purposes. In particular, prices of factory sites in the metropolitan area went up 4.03%, which is the highest increase compared to Incheon (4.47%) and Gyeonggi (3.38%).

Indeed, the Namdong Industrial Complex in Incheon, one of the representative national industrial complexes located in the metropolitan area, sits on land being traded at 5.5 million won, which is a more than a 50% increase from the 3.5 million won per 3.3m² of last June. The Korea Industrial Complex said that even though public land prices for the Shihwa and Banwol industrial complexes in Ansan are currently around 900,000 won per 3.3m², their going prices are more than 4 million won.

Dwindling Industrial Competitiveness of the Metropolitan Region-

Prices for factory sites have gone up in large part due to the short supply of land. Due to the implementation of the ‘Factory Location Limit System” in the Seoul metropolitan area, there has not been a new supply of industrial land in seven years since the Shihwa Industrial Complex broke ground. At the same time, with a series of new city development plans unfolding, factories that were operating on this land have been forced to move to other locations, and real estate prices near the sites have increased sharply.

Among the 4,311 companies housed in the Namdong Industrial Complex, 2,179 or 50.5% of them lend the land their factories are on as of at the end of August. One former official of the Ministry of the Construction and Transportation said, “The government’s housing policies are distorting industrial policies and reducing the competitiveness of the metropolitan area.”

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