Capital Relocation Plan Has Mixed Effect on Local Neighborhood Economics

“Seventy percent of the residents here are tenant farmers. They are driven away empty-handed because of the capital relocation. Even residents who own their land feel at loss about what to do with the unreasonably low compensation,” said Lim Young-soo, village head in Yanghwa2-ri Nam-myeon Yoengi-gun, Chungnam.

“Land nearby the land that will accommodate the new capital will be a jackpot after five years. Even now, the prices are rising overnight day-by-day,” said a real estate agent in Jochiwon-eup Yeongi-gun, Chungnam.

It has been a month since the relocation candidate site evaluation was announced on July 5. With the final call for the ultimate decision on August 11, expectations, confusion, and concerns are swirling in the Yeongi-gun, Chungnam- Gongju-shi (Janggi-myeon) area.

Areas that evaded accommodating the new capital are experiencing skyrocketing real estate prices, but those which didn’t are full of the sighs of people who have to leave their own homes. Some point out that the areas that will accommodate the capital will “crack their begging bowl” and that the surrounding areas will hit some “jackpots.”

Surrounding Areas of the Future Capital Are on the Rise-

A real estate agent that I met in Osong-ri Gangoi-myeon Cheongwon-gun, Chungbuk said, “Seventy percent of the useful land near the Osong train station of the Gyeongbu high speed train must belong to people in Seoul.”

The farming land in this area is worth around 300,000 won per pyong. The price has doubled and increased even up to five times more than that of last year.

Jochiwon-eup is said to be the biggest beneficiary of the capital relocation. A 30-pyong apartment in the second Wookil apartment complex near the Jochiwon station now costs about 130,000,000 won in the market, compared to its previous price of 100,000,000 won in early July right before the evaluation results were announced. The price asked is about 150,000,000 won, which is a 66 percent increase compared to the beginning of this year.

Houses for lease are hard to come by as well. A local real estate agent tips off, “some people in the speculation business are trying to move down here to lease apartments in Jochiwon-eup and other areas in an attempt to qualify for farm land acquisition.”

Land prices are strong as well. Lands surrounding the paved roads in Chimsan-ri, Jochiwon-eup are on the market for about 2,500,000 to 3,500,000 won per pyong. Some have doubled in price in just six months.

Shingwan-dong and Geumheun-dong in Gongju also are attracting investor attention. Lee Se-young, owner of the Daesan Licensed Real Estate Agency in Gongju-shi, foresees that “the prices in the surrounding areas will keep getting higher.”

Local Residents in the Areas Accommodating the New Capital are On the Edge-

After driving 10 minutes south from the Jochiwon station, the air is completely different there.

Lee Seung-sook, a local resident at Galwoon3-ri Nam-myeon, Yeongi-gun, said, “Even if we get paid twice as much as what the declared value is set, it is difficult to get an apartment for the family,” adding, “We cannot leave our own place for some dirt-cheap price.”

The market price of the land that he owns was once around 200,000 won per pyong, but the declared value is 29,000 won per pyong. The compensation amount will be set higher than the declared value, but it is expected be set much lower than the market price.

You can hear rumors in the area that the compensation amount will be set around 1.5 times or twice as much as what the declared value says.

Lee says, “Since the price of farming land in the surrounding areas has skyrocketed, we have to move far away from where we live.” Tenant farmers who do not own any piece of land are more desperate. The tenant farmers account for more than half of all the 55 households in Galwoon3-ri. Lim Young-soo, the village head of Yanghwa2-ri, Nam-myeon, said, “For Yanghwa2-ri, about 80 percent of the land belongs to people outside of the village, and 70 percent of the 75 households are farming on somebody else’s land.” He added, “I think they want an increase in tax yields by instigating speculation because they say tax revenue has been low.” The residents of the Yanghwa-ri are having a comfort party on August 14 so that they don’t forget about the village even after it disappears.

Areas of Speculation Expand-

Areas of speculation in the Chungcheong area are expanding from Yeongi-gun – Gongju City area to Choengyang, Yesan, Hongsung and other surrounding areas.

It is being said that “one real estate agency is springing up every day” in these areas since July.

The administered area around the paved roads in Mok-myeon and Jeongsan-myeon, Cheongyang-gun has experienced a price increase from around 150,000 won per pyong in early July to 250,000 won per pyong in August. Areas around the two-lane paved roads in Hongsung were worth around 300,000 won per pyong right before the announcement of the capital relocation candidate sites, but the price has skyrocketed to around 600,000 won per pyong recently.

The administered area around Eumbong-myoen, Asan city is experiencing a price increase, as much as three times more, even in far-off lands away from the paved roads and hardly accessible in the mountains, combined with expectations of its eventual development as a “corporate city.” The land price has tripled since the beginning of the year, and now ranges from 500,000 won to 600,000 won per pyong.

Local real estate agents speculate that prices could even go higher when the final announcement of the relocation site is made on August 11.

Eun-Woo Lee In-Jik Cho libra@donga.com cij1999@donga.com