An address some people will die forThere are two kinds of Koreans ― those who live in Gangnam, or southern Seoul, and those who don’t.
It’s many a Korean’s dream to be settled into an upscale Gangnam apartment. This yearning, if not obsession, is confirmed by the growing numbers of zeroes attached to the area’s apartment prices.
Despite the government’s efforts to stabilize apartment rates, the costs keep soaring. There are just too many people who want to be in Gangnam, and a limited apartment base. Living in Gangnam demands premium prices. It’s gotten so a Gangnam address refers not only to a geographic but a social hierarchy.
Those spiraling real estate values may have led to one owner’s suicide.
It doesn’t take a Ph.D to diagnose the cause of Gangnam fever. According to real estate industry experts, it’s got everything to do with education.
Clusters of hagwon, private cram schools oriented around preparing teens for the rigorous college entrance exam, hug the district’s ritzy high rises. These are the elite of Seoul’s hagwon subculture, attracting the best teachers in each respective specialty.
No wonder Gangnam is such a sought-after locale, one where families’ No. 1 goal in life seems to be getting their children into a prestigious university. In a survey the Gangnam district office conducted last September, 44.4 percent of residents said they chose the area for its excellent educational environment.
At the core of the Gangnam frenzy sits Daechi-dong, where elite hagwon have swarmed like bees to a flower. People are waiting in line at these cram schools, salivating over the offerings.
The craze is not limited to denizens of Seoul ― Gangnam fever has gone national. As a result, a new version of “goose daddy” has appeared ― fathers making money in the provinces while mothers and children are living in Seoul.
Parents with high aspirations for their children are aware that mingling with others from prestigious educational backgrounds helps them raise their own social status, forming yet another reason to bed down in Gangnam.
Apartment dwellers in Daechi-dong mostly hail from the upper-class strata of society, whether they are doctors or high-ranking executives at a jaebeol, or conglomerate, like Samsung or LG. By merely joining the Gangnam community, the thinking goes, you’re part of well-bred society.
“I’m afraid of the very thought of leaving Gangnam, though that’s what I should be doing considering my present financial situation,” said one retiree in the Seocho district. “For my sons and daughters at their eligible ages, however, I should not ― because living in Gangnam is a way to get fine marriage matchmaking offers.”
In the past, says Cho Young-ho, a member of the board of directors of World Construction, Koreans were divided into two groups: Seoulites and all others. “With the expansion of Seoul, however, one’s whereabouts in Seoul became the key factor, being of benefit to the Gangnam area. This refers to a shift in social hierarchy.”
In most cases, those who move to Gangnam for educational reasons stay put for at least 20 years. Even if their children do not enter an elite university, they find relief in knowing friends and alumni of such schools.
“In this world where connections rule, living in Gangnam helps a lot,” says Goh Jong-wan, president of RE Members, a real estate investment firm.
A hint of change exists within this cutthroat atmosphere. Longtime Gangnam residents are founding more down-to-earth communities. For instance, some local gynecological clinics are arranging get-togethers of mothers and newborn babies, with the hospital of birth forming the basis for friendship.
The Gangnam frenzy grew out of the myth that investment in local real estate was foolproof. Thus far, the Seocho, Gangnam and Songpa districts have proved the myth to be a reality. In 1988, the price per pyeong (3.3 square meters) of Gangnam real estate was 3.18 million won (about $2,600). Only three years later, that figure had nearly tripled to 8.57 million won. And today? The going rate is a whopping 13 million won per pyeong. Similar areas north of the Han River go for one-third of these three Gangnam districts’ rates.
The Eunma apartment complex in Daechi-dong is valued at 2.7 trillion won, exceeding even the Gangwon Land casino and hotel’s estimated market value of 2.5 trillion won. A new entry to the Gangnam apartment fever, Samsung’s Tower Palace boasts a market value of more than 2.7 trillion won. With Tower Palace, you can take over the Hanjin Group, and still have 50 billion won left over.
Until the late 1960s, Gangnam was a far cry from its present-day glory. It was more of a deserted prairie, with vegetable markets to meet the rest of the city’s basic needs.
Seoul’s first apartment building was built in 1958 in Jongam-dong, in the heart of Gangbuk. Then-President Syngman Rhee showed up at the opening ceremony, along with a crowd curious to see the strange building that resembled a henhouse. By the late 1960s, Gangbuk had become the congested hub of the capital, only exacerbated by a torrent of people from the countryside.
About this time, both the government and construction companies turned their eyes toward Gangnam. Bridges began to span the Han River in growing numbers, and prestigious high schools moved south of the Han.
The fever really caught fire when the late Chung Ju-young, the founder of Hyundai, decided to build the most luxurious apartment complex at the time in Apgujeong-dong. For a construction site, Mr. Chung settled on a broad, empty field facing the river, which at the time looked like a moor.
“Build the perfect apartment complex, which nobody else can follow,” Mr. Chung ordered his minions. Mr. Chung allegedly gained influence among politicians and other upper-class types by giving them apartments there. The elite started to move in, helping shape the district into an object of envy.
On the other hand, Samsung chairman Lee Gun-hee chose Dogok-dong for his palatial construction. With Mr. Lee’s marching orders, Tower Palace ― “the best and tallest apartment for the best members of the society” ― began to soar skyward The identities of Tower Palace’s residents-to-be largely remain a secret, but they will undoubtedly be society’s upper crust.
In the year 2003, Gangnam has come a long way from vegetable markets. Everyday workingmen can look, but they need not apply.
“Gangnam is now the mecca for the high class of the society,” says Goh Jun-seok, in charge of real estate investment at Shinhan Bank’s private banking sector. “Just like the haves adore goods with brand-name values, they like Gangnam apartment complexes.”
Some people express concern that the Gangnam frenzy could incite a backlash among the disenfranchised.
A banker in Gangnam, who insisted on anonymity, believes that during a depressed economic cycle some bitter individuals may target the well-off as a form of retaliation.
“The residents of Tower Palace, the No. 1 Gangnam apartment building, are seriously considering hiring private bodyguards,” he said. Last year, a housewife who sold a Daechi-dong apartment house killed herself when its market price soared more than 2 billion won after her sale.
Against all these odds, however, nobody seems to be stopping Gangnam apartment premiums from climbing even further.
A member of the World Bank’s International Finance Corp. who visited Korea just after the 1997 Asian financial crisis, said, “Considering Korea’s past economic activities, Korea will be able to overcome this crisis. But it’s not the end ― Korea will face an even bigger social problem, the extreme gap between the rich and the poor.”
He was right, looking at today’s Gangnam frenzy. Korea has joined the group of nations with distinct social, cultural and economical classes.
by Lee Sang-geon, Kim Myeong-ryong