More buyers pursue cheap green belt areas

More land transactions are taking place in the green belt zone around the Seoul metropolitan area due to cheaper prices and the possibility that the government plans to lift development restrictions on the zone.

A 42-year-old Seoul resident surnamed Chang recently gave up on buying land in the green belt zone of Hanam, Gyeonggi, despite its cheaper price. He said that the salesperson tried to convince him that the development restrictions would soon be lifted from the area, but he pulled out because the assertion didn’t seem reliable.

“The green belt [restrictions] need to be canceled firsthand since it remains only as a possibility,” Chang said. “And even if the area is freed from the restriction, the land price increase is hard to guarantee.”

Under current laws, land deals in the green belt zone are allowed as long as the area is not part of the land permit area, where permission is required from the local government. The permit area is usually designated as premises where land prices are expected to rise rapidly once development takes place.

Divided plots of land in the green belt zone, outside land permit areas, are sold by landlords directly or through agencies.

Land deals are most popular in areas where more than 70 percent of the district is classified as a green belt zone. These areas include Gwacheon, Hanam, Uiwang, Goyang, Namyangju, Siheung and Dangjin in Gyeonggi. The space area of allotted land ranges from 330 square meters (3,550 square feet) to 3,300 square meters, and prices are relatively cheaper.

A plot of land in the green belt zone of Hanam costs 300,000 won ($250) to 500,000 won per 3.3 square meters. “Many investors are calling to ask land prices after word spreads that the area has cheaper prices,” a real estate agent doing business in Hanam said.

The sales increase is largely due to the overall increase in the real estate market and the government’s recent progress in green belt zone cancellations.

In May, the government submitted a revised bill of the existing law on the designation and management of green belt areas. The revision gives local governments the power to lift restrictions on reen belt zones less than 300,000 square meters being given to the local government. The right is currently held by the Ministry of Land, Infrastructure and Transport. Once the bill is approved, the government expects the green belt cancellation process to speed up from two years to about one year.

However, investors are warned to be cautious since enforcement of the bill doesn’t necessarily mean green belt zone cancellations. Some real estate agencies are attempting to lure customers by saying that the easing of government restrictions is almost equal to removing regulations on green belt zones completely.

“Many misinterpret the situation and think green belts will be set free once the bill is approved,” Shin Jin-su, an official from the Hanam city government, said. “The law will simplify the complicated canceling process of green belt zones, but it does not guarantee actual cancellations.”

Some agencies even claim the land prices will double or triple once the green belt restriction is removed. However, real estate experts say, “The profits will improve only when the land is capable of being developed, such as into factory or residential areas.”

Even if the land is free of development restrictions, it may not be granted immediate development rights.

“Green belt cancellation and development plans are two separate things,” Park Nam-hong, an official from the Gwacheon city government’s real estate management team, said.

For land with big developmental potential, there is a possibility the areas may be classified as a land permit area after the development limitation is lifted.

In this case, sales of the land will become difficult for investors, and their investments could be tied up in the land for a long time.

Details of the land, including its shape, boundary and whether the area is connected to the road, should be considered as well.

Prospective buyers should also check if the land is a co-owned property since it is hard to exercise ownership if it is shared property.

BY HWANG JEONG-IL [kim.jeehee@joongang.co.kr]