Just about an hour’s flight from Shanghai, the South Korean volcanic island of Jeju has become a popular destination for Chinese investors.
Designating the island as a special economic zone, Korean authorities have been stepping up efforts to bring in foreign money. In 2010, the local government launched new immigration policies under which non-Koreans who purchase homes worth more than 500 million won (US$488,000) in Jeju and reside there for over five years can get permanent residency.
After regulatory measures targeting foreign homebuyers were introduced in Hong Kong and Singapore, wealthy Chinese shifted focus to regions such as the United Kingdom and United States, sending home prices higher in those places. Following the spike in prices there, many investors have been eyeing Jeju, where property is still relatively cheap.
Zhang Ping, a general manager at consulting firm Insite Group, noted that housing prices and supply both went up following the change in immigration rules at Jeju. Chinese are now said to make up 80 percent of the homebuyers in the island at present.
Korea Exchange Bank said deposits from Chinese customers at its two branches on the island reached 260.8 billion won (US$255 million) in March, up from 4.3 billion won in 2012. During the same period, the number of Chinese corporate clients rose from 9 to 43.
Because of the surge in deposits, Woori Bank has set up special counters staffed by Putonghua-speaking employees in its Jeju branch to serve Chinese customers.
Besides buying homes in Jeju Island, Chinese are also building casinos there. In February this year, a Chinese developer Landing International Development announced that it has formed a joint venture with Genting Singapore. The former said it will invest US$2.2 billion in a Jeju gaming project that will be developed on lines of an existing resort based in Singapore’s Sentosa Island.
There are now 16 foreigners-only casinos in South Korea, and half of them are located in Jeju Island. Chinese developers are also planning to build hospitals, schools and other facilities on the island.
But local residents are opposing the influx of Chinese capital. Some are worried about potential skyrocketing of home prices while others fear destruction of the island’s natural environment due to overdevelopment. Meanwhile, there are also worries that gaming businesses will distort the island’s economic structure.
Responding to public concerns, the new government in Jeju Island recently tightened the terms and conditions for foreigners to get permanent residency.
According to some reports, local authorities are planning to review the projects that have not officially commenced yet, aiming to slow down Chinese investment on the island.
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