Investment as double-edged sword
By Tu Lei Published: 2015-3-2
Locals have mixed feelings about foreign investments on South Korea’s Jeju Island
After a delay of more than half a year, Anhui-based Landing International Development restarted its project in Jeju Island, South Korea, which shows a shift in the local government's attitude toward foreign investment. However, local residents hold mixed feelings about overseas investment.
A bird's eye view of Landing International Development's project in Jeju Island, South Korea Photo: Courtesy of Landing International Development
Zhang Wen (pseudonym), a housewife in Changzhou, East China's Jiangsu Province, is a homebuyer in Jeju Island.
Two years ago, she bought a house more than 3 million yuan ($478,307) on the island, and she now has a place to stay on the island for vacation and get-togethers.
"I bought the house mainly because of the convenient transportation, and the fresh air and clean water," she told the Global Times on Monday.
Zhang is among the many Chinese investing in Jeju Island. After years of development, the island has become a Mecca for Chinese investors.
Chinese-led investment
After a half-year delay, another major project was restarted on Jeju Island , the latest move by Chinese companies to explore overseas housing markets.
In February, the Hong Kong-listed housing developer Landing International Development Ltd unveiled a real estate project on Jeju Island, a first time for the company.
Together with Genting Singapore PLC, the 2.2 trillion won ($2 billion) project will feature a world-class theme park and casino, as well as five-star hotels and villas.
The Anhui-based company claimed the project is expected to attract 15 million tourists annually, higher than the current annual number of tourists on Jeju Island.
Landing is not alone.
After arriving at the airport on Jeju Island, one might see a big advertisement by Shanghai-based Greenland Group announcing that an investment of at least 4 million yuan would give the investor permanent resident status in South Korea.
China Business News reported in February that Greenland has developed projects worth $900 million in Jeju, from residences to a casino. In August 2014, the company was granted an area of 470 mu (31 hectares) of land to expand its healthcare investment on Jeju Island.
Chinese developers are increasingly expanding business overseas mainly due to the restrictive housing policies in the domestic market and lower overseas investment costs, Thomas Lam, senior director and head of Valuation & Consultancy Greater China of Knight Frank LLP, told the Global Times on Monday.
In 2010, the South Korean government said it would grant permanent residency status to those who invest at least 500 million won ($454,300) in Jeju Island, which include healthcare, education and employment allowance benefits.
The Ministry of Land, Infrastructure and Transport said in February that foreigners owned 234.7 million square meters of land in South Korea as of 2014, which is a 3.9 percent higher than in 2013.
The Chinese account for most of the land investments made by foreigners at 50.2 percent, followed by 22.4 percent for those from the US, and 14.1 percent from Japan.
Changed attitude
However, investing on Jeju Island has its downside. The Landing project, which was supposed to start in June 2014, was halted by the local government.
According to a report from the Beijing-based Legal Daily in February, which cited the Korean media, the newly elected governor was concerned that big investments were speculative in nature and that the projects would harm the local environment.
But at the opening ceremony, Won Hee-ryong, the governor of Jeju Special Self-Govering Province, clairfied that the local government welcomes foreign investment, and he had the project suspended because Landing failed to provide the numbers of guest rooms and information on the casino.
He said Jeju Island will not change its investment attitude toward Chinese companies, and the government welcomes investments that preserves the island's natural environment and enhances the island's value.
Yang Zhihui , chairman of board of directors of Landing, said at the opening ceremony that the company will start its operation in 2017 and is expected to fully complete it by 2019. The project will create more than 150,000 jobs and local residents will comprise over 80 percent of the workforce.
However, Kim Tae-il, architecture professor at Jeju National University, said the local government, overwhelmed with the inflow of foreign investments, still allows too many projects that could harm the local economy and nature in the long run.
"Too many projects in real estate and casino could harm the image of Jeju Island," Kim said, adding that "those projects don't yield much positive ripple effects on the local economy and put Jeju's natural resources at risk."
Mixed feelings
Many local residents also do not share the local government's enthusiasm.
Kim Jin-mi, a South Korean housewife, told the Global Times on Sunday she admits the investment will help the local economy. But she said housing prices in Jeju have rapidly increased by up to $20,000 in two years.
She added that housing and land prices in Jeju are rising faster than in other parts of South Korea, and local residents can't afford those prices. She said most local residents blame rising prices on Chinese investment.
"The foreign investment policy of Jeju is helping foreign investors more than the local economy. There are no practical benefits to the local economy," she said.
Mrs Zhang, who invested on Jeju Island two years ago, told the Global Times that housing prices have risen by about 20 percent.
Jun Ji-hun, a local resident who runs a travel agency, told the Global Times Sunday that foreign housing investments do not help the local economy that much, and local people resist these investments.
"I think we should always respect the sentiments of both the residents and local government. We should try to find a way to communicate more with each other," Jun said.
Park Gayoung contributed to this story
