Foreigners embroiled in suspicious land deals

A view of apartment complexes seen in Jamsil in southern Seoul [YONHAP]

The Korean government detected over 400 suspicious land transactions made by foreigners between 2017 and 2022, with more than half of the cases linked with Chinese nationals.

The Ministry of Land, Infrastructure and Transport reported 437 land acquisitions deemed illegal to related investigation agencies following its large-scale nationwide investigation conducted from February through to June. Out of a total of 14,938 foreign land transactions between 2017 and 2022, the investigation then focused on 920 suspicious cases, in which individuals involved were asked to provide supporting documents for further examination.

This investigation is the first of its kind by the land ministry specifically targeting foreign land transactions in response to the growing call for tougher measures to prevent illegal property transactions by foreigners in Korea. The regulation of speculative housing transactions by foreigners has been set as one of the key national tasks under the Yoon Suk Yeol administration.

Chinese buyers accounted for the largest number of cases by nationality, with 211 cases, representing 56.1 percent of the total. Transactions where the seller was a foreigner and the buyer was a Korean national were excluded from the tally. Americans accounted for 21 percent of the cases, followed by Taiwanese at 8 percent, and Canadians at 6.6 percent.

As of 2022, Chinese nationals, including Korean-Chinese, constitute the largest portion of foreign residents in Korea, making up 37.8 percent of the total, according to the Ministry of Justice.

The investigation identified various violations, with the most common being the manipulation of reported transaction amounts and contract dates, with 419 cases of misreported contracts. Additionally, 61 cases were suspected of tax evasion through expedient gifting, and 35 cases raised suspicions of illegally imported funds from overseas.

Among the transactions that exhibited significant price differentials, one Chinese buyer purchased land in Incheon's Gyeyang District in 2017 for 8 million won ($6,112) and sold it three years later for 94.5 million won, resulting in a profit margin of 1,081 percent. Another example involved a different Chinese individual who bought land in Incheon's Seo District in 2020 for 970 million won and sold it the following year for 1.23 billion won.

In terms of regions, Gyeonggi had the highest number of suspected illegal transactions with 177 cases, accounting for 40.7 percent, followed by South Chungcheong at 14 percent, Jeju with 12.2 percent, and Seoul with 7.8 percent. These regions displayed consistent development demand and significant land transactions, potentially fueling expectations of price differentials.

The land ministry plans to inform relevant agencies, including the National Tax Service, the National Police Agency, the Korea Customs Service, and local governments, in order to initiate further criminal investigations, impose fines, and take necessary actions. Additionally, they have scheduled a second investigation into foreign real estate speculation for the latter half of the year, along with planned investigations focusing on non-residential transactions such as officetels, or studio apartments.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]