Rich Koreans Unfazed by Property Speculation Crackdown
Rich Koreans seem unfazed by tougher regulations intended to crack down on real estate speculation.
A majority of the rich have not only held on to their real estate holdings, but half of them have no intention of selling them within the next two or three years, according to a survey by KEB Hana Bank out on Wednesday.
The banking group surveyed 808 customers with financial assets of more than W1 billion since October last year (US$1=W1,068).
Their real estate holdings have increased compared to a year ago and they are if anything more optimistic about the real estate market in the future. The average value of their real estate stood at W6.23 billion each, up around W1.73 billion on-year, and accounted for 50.6 percent of their total assets.
Investment-use, commercial property was more than twice the size of owner-occupied real estate. Commercial property accounted for 46.4 percent of their total holdings, owner-occupied property 25.4 percent, land 16.9 percent and investment homes 11.3 percent.
Some 85.6 percent own more than one home for investment purposes. They favored investing in small to mid-sized apartments, followed by officetels and large apartments. A whopping 34.5 percent of investment homes are in the affluent Gangnam district of southern Seoul, followed by Gyeonggi Province, Songpa and Seocho districts.
"The government came up with tougher real estate regulations on Aug. 2 last year, including boosting the transfer tax for multiple-home owners, but those steps have not had a major effect on the wealthy," the report said.
Only 4.7 percent of respondents said they have sold some or all of their properties as a result of the new rules. Some 58.6 percent said they have no intention of selling their investment-use property within two to three years, three times more than those who are thinking about it.
In fact they have a rosier outlook for the market than they did a year ago. Some 40 percent expect it to remain slow for the next five years, 38 percent expect it to get worse, but 22 percent forecast a recovery, compared to only seven percent the previous year.
On the other hand, not many are rushing to buy more real estate. Some 43 percent intend to keep their real estate holdings and 25 percent to reduce them and move their money into financial investments. Only 14 percent said they will boost their real estate holdings and reduce their financial assets.
Those who do want to invest are more interested in houses and apartments compared to the previous year. Some 47.6 percent said they plan to invest in office buildings or store fronts, down around nine percentage points. But 16.7 percent said they want to buy investment homes or apartments, up around five percentage points, and 13.5 percent plan to buy houses or apartments to live in, up 4.5 percentage points.
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