Ownership of land by foreigners increases rapidly

Foreign ownership of property is growing quickly, with Chinese purchases rising especially fast.

The rapid accumulation of real estate by non-Koreans has inspired a call to limit purchases by overseas buyers.

Foreigners owned 20.14 million square meters (216.8 million square feet) of land in Korea as of the first half of last year. This is a 67.9 percent increase from 2016's 11.9 million square meters, according to Ministry of Land, Infrastructure and Transport data.

Rep. Kim Sang-ho, of the opposition People Power Party (PPP), notes that non-Koreans are snapping up land as local Koreans face restrictive measures to prevent speculative investment.

Rep. Kim said that people from China owned 54,112 lots in Korea in the first half of 2020. That's up 125.1 percent from 2016's 24,035.

The government assessed value of the land owned by Chinese was 2.7 trillion won ($2.4 billion), a 30 percent increase from 2.1 trillion in 2016, or 624.4 billion won more.

The land owned by these buyers were concentrated in the greater Seoul area. As of first half of last year, people from China owned 8,294 properties in Seoul, which is an 89.5 percent increase from 4,377 in 2016. In Gyeonggi, the rate of increase was 181.3 percent.

Chinese purchases of land in Jeju are also up. In 2016, Chinese purchasers owned 4,894 properties on the southern island. In 2020, that figure was 11,267.

People from China were also active in the apartment market.

Among the 23,167 apartment units bought by foreigners in Korea between 2017 and as of May 2020, 58.6 percent were bought by Chinese citizens, according to National Tax Service data.

Foreigners are free to buy property in Korea. They only face certain reporting requirements, such as those related to the inflow of foreign currency to be used for the transaction.

China greatly restricts foreign ownership of land.

"Under the principle of reciprocity, the system needs to be changed to be more rational," said Rep Kim.

In a report released in October, the National Assembly Research Service (NARS) proposed a bill that limits speculative real estate purchases by foreigners not living in Korea. The bill also included a different tax rate.

Rep. Lee Yong-ho, an independent, in August last year submitted an amendment that would impose a maximum 30 percent acquisition and capital gain tax on foreigners trading housing units. The National Assembly's Security and Public Administration Committee rejected the bill, citing the possibility of violating the reciprocity principle against foreigners.

BY KIM WON [lee.taehee2@joongang.co.kr]