Even though the buying and selling of houses and apartments is
illegal, it is becoming more widespread and sophisticated, said
defectors as well as experts who study the ruined economy.
On paper, the socialist state owns all property. But the percentage
of North Koreans who are buying their own home — as opposed to
waiting for the government to assign one — is growing rapidly,
surveys of defectors show.
Brokers can be found with lists of property for sale in private
markets selling food and cheap consumer goods that are tolerated by
the government in cities and towns around North Korea, the defectors
and experts said.
"You can find a house you want by asking brokers," said Kim Young-il,
a defector and activist in Seoul.
Deals are done in U.S. dollars in the capital Pyongyang and in
Chinese yuan along the border with China, where most of the North's
trade with the outside world takes place. The buyers and sellers
then bribe housing officials to effectively approve the transaction
by issuing or modifying residency documents, the defectors and
It's another example of how the regime of leader Kim Jong Un is
turning a blind eye to a black market that is offering North Koreans
a chance to upgrade their living conditions, move from one location
to another or to simply make some money, especially given that house
prices have been rising steadily.
It is common for defectors to send money to the North so their
families can buy better homes. Activist Kim and two other defectors
say they have also heard of some people buying property as an
investment ahead of what they hope will be the eventual
reunification of their impoverished homeland and the wealthy South.
Reuters could not confirm those accounts.
Defectors send an estimated $10 million each year to help their
families in the North, according to the Organization for One Korea,
a South Korean support group for defectors. The money is routed
through agents on China's side of the land border.
"Money talks in North Korea. If you have money, send it to somebody
you trust. You can buy a decent house in the border region with
China," said Kim, the defector, who runs a non-governmental
organization called People for Successful Corean Reunification,
which uses the ancient spelling of Korea.
Kim told Reuters he had a friend who needed to raise money last
winter to fund his escape to the South, so the friend sold his
apartment in the North Korean border city of Hyesan for 40,000
Chinese yuan ($6,600).
He declined to identify his friend, who he said was at a
re-settlement center south of Seoul that helps defectors try to get
to grips with life in South Korea.
MISSILES INSTEAD OF HOUSING
Under the socialist system erected by Kim Il Sung, the young
leader's grandfather, the government built and allocated housing to
Then famine killed an estimated 1 million people in the mid-1990s,
causing the collapse of the state food distribution system. That
opened the door to private markets selling food in the late 1990s.
Trading in property soon followed, especially since the increasingly
cash-starved state spent money on its 1.2-million strong military
instead of public housing.
Under North Korean law, anyone who sells, buys or rents a house can
be sentenced to hard labor.
But a survey last year of 133 defectors by the Seoul National
University's (SNU) Institute for Peace and Unification Studies found
67 percent of them had bought their own homes, compared to 14
percent who had been given accommodation. The defectors left North
Korea in 2012.
A similar survey of 126 defectors who left in 2011 showed 46 percent
bought their own home.
"With market forces spreading, North Koreans are becoming able to
dream of moving into a better house," said Jeong Eun-mee, an SNU
research professor involved in the survey.
"Homes, one of the few resources North Koreans have, are now
extensively traded unofficially. The regime has no option but to
tolerate this ... because officials are involved as well."
CIGARETTES OR FOOD WILL DO
In a 2013 report, the Korea Institute for National Unification, a
South Korean state-run think tank, said housing officials were
usually bribed with cigarettes or food to approve a property
transaction in one of the world's most corrupt countries.
[to top of second column]
While it is impossible to independently confirm anything in North
Korea, similar studies support the suggestion of growing property
Defectors are also among the best sources of information since
better communications have opened the way for regular contact with
their families. Defector groups in Seoul estimate 3,000 phone calls
are made each day to the North, routed through Chinese mobile
networks along the border.
There is no hard data, but apartment prices have risen in the last
decade in Pyongyang and small cities on the Chinese border,
Housing now acts as a store of value for North Koreans looking for
ways to earn money outside the poorly paid government sector, they
Lee Yun-keol, a biologist who came to Seoul in 2005, said he had
heard that an apartment he used to own in Pyongyang was worth
$100,000, nearly 15 times what he paid more than a decade ago.
Properties close to statues of Kim Il Sung or his son Kim Jong Il in
the center of Pyongyang command a higher price thanks to constant
water and electricity supplies, defectors said.
They added that the property market revolved around the brokers, who
keep a low profile in private markets but can be found by asking
around. Once a buyer and seller agree the price, they bribe housing
authorities to alter names on mandatory residence permits that give
North Korea only allows one house to be registered against one name,
so people use the names of relatives if they want to buy more.
Outside Pyongyang, where there is more scope for private commerce
because state scrutiny is less intense, the property market has also
created a new class of businessmen who employ workers outside the
broken state system and raise funds to buy building materials,
defectors and experts said.
Kim Joo-sung, a North Korean scientific researcher who defected in
2008, said he had a friend in his home city who became a
construction contractor as far back as 2002.
The friend worked with brokers who promoted unit sales by phone
before they were even built, the researcher said, adding he paid off
officials by giving them new homes.
"He became one of the richest men in my community," said Kim, who
declined to name his home city for fear of reprisals against his
family in North Korea. He also declined to reveal his friend's
identity, saying he had lost contact with him when he fled North
The North Korean state has also been getting in on the property
Since taking office more than two years ago, Kim Jong Un has
presided over a construction boom with the aid of funds from China,
the North's major backer, and Russia, a former Cold War ally.
The state-run KCNA news agency, for example, reported in January
that the government had built apartments for 1,000 families of
scientists in Pyongyang.
For some newly built flats in Pyongyang, government firms sell the
units, keeping the money as profit to stay viable, experts and
"With the government's knowledge, state agencies and institutions
are selling houses they have built," said an ex-senior intelligence
official, who came to Seoul in 2008 but declined to be identified
because of concerns for his safety.
(Editing by Dean Yates)
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