The Worker’s Party of Korea, the North Korea’s state-owned newspaper, posted a picture of a fancy night view of Pyongyang Changjon Street on the second page of their Sept. 29th edition. Changjon Street, construction of which was completed in June 2012, is a new apartment complex is known as “North Korean New Town.”
As investment in real estate is active in North Korea, a new apartment in Pyongyang is said to be traded at US$100,000. In addition, loans with usurious annual interest rates of 20 percent have become generalized as private loans develop.
According to a thesis presented by Gyeongsang National University professor Jung Eun-i on Oct. 28 at the first “World Conference on North Korean Studies,” a newly-built apartment in downtown Pyongyang is sold at around US$100,000. The price is 2.5 to 3 times more expensive than that of 8 years ago, which was between US$30,000 and US$40,000. This research was carried out by indirect interviews with North Korean residents through their relatives.
Furthermore, the unofficial profession of realtor has emerged; those who professionally intermediate real estate transactions. In North Korea, where housing transactions are illegal, brokers help with the administrative processes involved in acquiring property, such as issuing a license to legally move into a house. They also spread information about the house, mediate housing sales, and receive 10 percent of the sale price as a brokerage fee.
It has also been reported that foreigners are also investing in real estate, since it is considered to be the most stable investment in North Korea. Foreigners secure lands jointly with North Korean trading companies and set up businesses such as automobile repair shops, restaurants, or stores. It is said that they make long-term contracts lasting 20 to 50 years for the sites, with an aim to build officetels or efficiency apartments when economic reform is made and the market is open.
Professor Jung explained, “Such a trend indicates that the market is expanding in North Korea,” and added, “It means that the range of products traded in the market is extended to durable goods like houses from nondurable goods like food and clothing.”
Professor Im Eul-chul of the Institute for Far Eastern Studies of Kyungnam University also dealt with the marketization of the North Korean economy. He said in his thesis “Formation and Development of North Korean Private Loans,” “The market mechanism spread in North Korea is extending from the consumption field to the production and finance sectors.” He added, “As capital accumulates in the private sector, private loans such as loan-sharking and remittance agency businesses are growing, and loan sharks are applying a yearly 20 percent high interest rate.”