For most of the 1.8 million foreign residents of Korea, the path to permanent residency came via work, marriage or being ethnically Korean. But on the southern resort island of Jeju, a small but growing number of foreigners have been taking advantage of an alternative path to residency – the Investor Immigration Scheme.
The premise behind the scheme is relatively straight-forward: foreigners receive Korean residency in exchange for purchasing a condominium in a designated foreign-invested resort development for more than USD 500,000 – well above the local average house price of USD 140,000.
The scheme was launched in 2010 by the local government in conjunction with the Ministry of Justice to stimulate foreign investment on the island and since been copied by four other mainland locations. While the impact on investment in these mainland locations has been negligible, in Jeju over 1,000 foreigners haven taken advantage of the scheme.
Virtually all – 99% of permanent residency applicants – have been Chinese, drawn to Jeju by its natural environment and proximity to China (it’s less than an hour flight from Shanghai) as well as the slowdown in the domestic Chinese housing market and growing demand for offshore wealth protection strategies.
In its early stages, the scheme provided a get-out-of-jail free card for developers who had failed to offload condos to local buyers. However since 2012, international developers including China’s largest developer, Greenland Group have arrived on the island to develop and market condominiums specifically for the northern Chinese market. Despite prices well above the USD 500,000 investment hurdle, the developments have achieved high pre-sale rates.
However, the scheme has raised concerns among some local residents over reckless development and has become somewhat of a political hot potato. In mid-2014, the newly-elected Governor of Jeju ordered a review of permits for major projects resulting in delays and revisions to several developments including Greenland’s Dream Tower and the Resort World Jeju project being undertaken by Landing International and Genting. The Governor also unsuccessfully tried to follow through on his election promise of increasing the hurdle for investment by requiring an additional purchase of USD 500,000 of local bonds.
Despite these challenges, the outlook for developers in Jeju remains positive with offshore demand for condos launched before expiry of the scheme in 2018 likely to remain very strong and with the boom in Chinese tourism not likely to end any time soon, there are plenty of development opportunities emerging outside of the condo sector including for hotels, casinos, retail and entertainment facilities.
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