By Yoon Ja-young



Chinese investors are increasingly buying up Seoul properties, leading to both expectations and concern.



According to the Seoul Metropolitan Government (SMG), Chinese investors owned 3,516 plots of land in Seoul as of the first quarter of this year, double their holdings in 2013.



Chinese investors are especially eyeing locations that are rising as popular tourist destination. Mapo District, the location of Hongik University and a popular destination among young people and tourists, saw real estate transactions by Chinese soar to 43 last year from 18 the previous year. The transactions totaled 22 in the first half of this year.



They purchase real estate to open businesses, such as restaurants, hotels or duty free shops, targeting Chinese tourists.



Their investment is not limited to commercial areas. Apartments in upscale residential areas are also rising as an attractive option. According to SMG, a 244.5-square-meter Banpo Xii apartment in Banpo-dong, Seocho in southern Seoul, was sold to a Chinese investor for 3.2 billion won. A month later, he bought another 244.5-square-meter home at the same price. The incident made headlines as he paid 500 million won more than the market price, each, to persuade the homeowners who had no plan to sell the apartment.



According to real estate agents in Banpo-dong, which has risen as the most luxurious residential area in Seoul over the past few years, there are several Chinese people in the apartment complex and some Chinese investors have visited real estate agencies looking for homes put up for sale. Real estate agents of Galleria Foret, a luxurious apartment in Seongsu-dong, Seongdong, are also reporting inquiries from Chinese investors.



Previously, Chinese' property investment in Korea was limited to Jeju Island, but their investments are diversifying to expensive apartments and buildings.



"The Chinese government had encouraged overseas investment due to a real estate bubble. They first eyed Jeju where they can get permanent residency, but now they are turning their eyes to Seoul seeking investment returns," said Ko Jong-wan, president of the Korea Asset Management Institute.



A real estate agent in Seocho said Seoul is attractive for Chinese businessmen. "They want to diversify their assets and have some properties overseas. They are especially interested in Korea as they find it culturally and geographically closer to China compared with Western countries. They also say apartments in Seoul are still cheap compared with Shanghai."



While the investment can help boost the real estate market, experts show concern, pointing out that Chinese investors have formed bubbles in some countries. Vancouver in Canada had housing prices rise over 20 percent last year and Sydney in Australia saw prices jump over 13 percent.



Ko said Korea wouldn't be an exception, pointing out that Jeju also saw the steepest increase in land prices during the past few years with the inflow of Chinese investors. "There should be measures to prevent possible negative effects on the market," he said.



