Speculators Still Rampant in Songdo

The government is disclosing its policies on immovable assets one after another, including the Incheon Free Economic Zone (Songdo International City, Yeongjong District, Cheongra District) which the government designated for the first time in Korea in August 2003, and the 1•11 act, but the zest for speculation on immovable assets in Incheon Free Economic Zone is still increasing. Many even take winning a ticket for an apartment within the Free Economic Zone as winning in a lottery.

Free Economic Zone as an Immovable Asset Speculation Area-

Advertisement posters reading, “Inquiries on Apartments in Songdo Welcome” or “Items for Urgent Sale” could be seen stuck on the walls of the immovable asset agencies within large stores in Songdo International City, Yeonsu-dong, Incheon, on January 17.

“Many give us calls asking about the premium, saying that they want to dispose of their sales tickets,” says a staff of an immovable asset agency S. “The police control has become tighter but it still is possible to resell the sales tickets.”

A doctor K (43) purchased a 59-pyeong apartment in mid December last year which was sold in Yeongjong District in Incheon last November paying a premium of 30 million won. Recently he resold the same apartment receiving 60 million won.

A housewife Kim (38) bought a 38 pyeong apartment the Incheon Urban Development Corporation is building in Songdo, named ‘Well County,’ in December last year. When she dropped by the model house on January 10 to sign the contract, she gave her phone number to the immovable asset agent who offered to inform her of the price of the immovable asset.

Since the next day Kim has been receiving imploring calls from the immovable asset agency asking her whether she is “willing to resell the apartment because the premium has got close to 200 million won.”

When a team of journalists of this newspaper called ten immovable asset agencies in Songdo and other areas on January 16 and talked about possessing a ticket for a Well County apartment, it was responded that premiums of 150 million won on average were available.

In an Internet portal site for information on immovable assets, replies are posted about the premiums of apartments reading “200~300 million won according to the floor” or “one billion won guaranteed at the time of move in.” Some realtors leave their phone numbers, saying illegal sales and purchases are possible.

By-project Immovable Asset Agencies are the Major Cause to Hike in Price-

The days of contracts of apartments in and around the Free Economic Zone never pass without the by-project realtors, also known as “tteot-tta-bang,” crowding in.

On the contract date of the Hanhwa’s apartment EcoMetro in Gojan-dong, Namdong-gu, Incheon, which was sold in November last year, the staffs of by-project agencies in Seoul arrived in foreign-made cars with cash amounting to several billions and illegally purchased, paying premiums, the apartments from the winners. Since they bought up nearly all the items, the premium hiked without limits.

They instigate illegal resale through what they call as “double registration.”

The term means making two registrations; first selling an apartment restricted against resale receiving a plus-alpha amount and registering the transfer of ownership with the name of the initial purchaser after moving in, then transferring the registration in favor of the purchaser. In Incheon resale is prohibited for five years by the law that designates all districts except Ongjin-gun as Over-speculated Areas.

If one is caught for trading apartment sales illegally, the person who tries to sell will have his or her ticket cancelled and be indicted to imprisonment less than 3 years or a fine under 30 million won, and the purchaser will also be punished.

Criticism-

Centered on civil organizations, criticisms pour out against that the Free Economic Zone is being transformed into speculation grounds of immovable assets.

Last December, when the Well County apartments the Incheon Urban Development Corporation sold in Songdo were traded at high prices, Incheon Association for Peace and Participation requested that the “public corporation quit engaging in immoral conducts and meddling with construction businesses.”

The National Tax Service recently launched an investigation covering traders of apartments above 50 pyeong and spotted speculators who recently engaged in illegal resale of apartments.

run-juno@donga.com kchwang@donga.com