• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Hi-Rise, DMZ View: Seoul's Hot Property Developers Near Once-Feared North

Posted on: Monday, 16 January 2006, 15:00 CST

By James Brooke

Ten kilometers from the heavily mined and guarded zone that divides North Korea from South Korea, workers at LG.Philips LCD are finishing a $5 billion plant that will produce liquid crystal display screens.

Nearby, apartment buildings are on the rise. And in the shadow of an old hilltop machine-gun nest, a cheery blue and red billboard announces that English Village, a new language-teaching theme park, will open in March. For two generations, the 50 kilometers, or 30 miles, between the demilitarized zone and Seoul were intentionally sparsely developed, a kind of buffer zone against a North Korean attack. But the political detente between the two countries is bearing economic fruit as South Korea's economic expansion washes away psychological barriers and now laps at the southern edge of the long-feared DMZ.

The stampede to what developers bill as the last best place near Seoul is propelled by the pressure of nearly 50 million people squeezed into South Korea and by an economy that looks to cap costs and to compete with China.

South Korea's industrial production grew 12.2 percent in November while its stock market rose 51.2 percent in 2005, and South Korea's government now forecasts 5 percent growth in 2006. Unemployment, already a low 3.5 percent, is expected to fall further, pushing South Korea's wages up near Japan's.

One way to cut costs is to move production to where land is cheap.

"The northern part of the province is really growing because of the real estate prices," said Sohn Hak Kyu, governor of Gyeonggi, the province that surrounds Seoul in the shape of a donut. Referring to one long-term projection for Philips's investment in the new plant, he said, "If Philips thought it was dangerous, how could they invest $10 billion?'

Lee Bang Soo, a spokesman for LG.Philips LCD, said, "If we are looking at the southern part of Seoul, there are traffic jams and the price of the real estate is very expensive."

Paju, a border city known to two generations of South Korean men as an end-of-the-line garrison town, has seen its civilian population double since 2003, to 300,000, as workers seek apartments that are far cheaper than in Seoul. To cope with this migration north from the capital, construction workers are doubling the width of the Freedom Highway, to eight lanes. Seoul's subway system is to be extended here by 2008. City leaders are lobbying to get the KTX, South Korea's bullet train.

Across a new road from English Village, tourists can visit Heyri Art Valley, a new $300 million arts complex with galleries and artist studios. After a day spent inspecting ceramics and sculpture, they can retire to a hilltop gallery, sip a cappuccino and watch the sun set over North Korea, only a few kilometers away.

"A lot of artists, regardless of ideology, are pioneers; they do not care about geography," Sang Lee, manager of the expanding arts colony, said of the move to this long-shunned area. Three industrial parks and one planned city of 150,000 are going up, all within 25 kilometers of the southern edge of the DMZ. In the last decade, land prices here have increased tenfold, faster than in Seoul.

"The area near the DMZ is abundant in natural resources, environmentally friendly," said Choi Gwi Nam, director of the planned city, labeled Ubiquitous City because all the apartments will have high-speed Internet access. Referring to the uneasiness that South Koreans have held for investing in what was an invasion route for North Korean tanks in 1950, he added, "Across the board, that concern is gone."

U.S. strategists, and some of their counterparts in South Korea, often note that the North has the world's third-largest standing army, 1.2 million soldiers. Half of these soldiers are stationed within 150 kilometers of the DMZ. Aimed south from the border, the North maintains what U.S. officials call "the world's largest artillery force."

Even five years after detente came to the Korean peninsula, visiting U.S. politicians still pose for photos at the southern side of the DMZ, calling it the "world's most dangerous place."

But polls indicate that fewer and fewer South Koreans believe the two countries will ever again go to war. A heavily militarized but largely bankrupt nation, North Korea has an economy that is 3 percent the size of South Korea's. "We don't think that North Korea is capable of attacking South Korea, because South Korea is strong," said Chung Dal Ho, a South Korean diplomat.

In a further sign of its growing confidence about peace on the peninsula, South Korea said Friday that it would lift or ease restrictions on 140 military reservations in the country areas used by the military or considered dangerous, including some in the area between the DMZ and Seoul.

The new mood is reflected in the erosion of the South Korean "discount" in its stock market. For years, South Koreans have complained that their companies trade at 15 to 20 percent below comparable companies in the same sector elsewhere. This lower valuation of South Korean shares has largely been erased by the rise in the Seoul market in recent months and because foreign money managers increasingly see an attack from the North as unlikely.

"Paju's reputation has completely changed from military city to high-tech hub," said Lee, the spokesman for LG.Philips LCD, in Seoul. "We are proud to make the northern part of Seoul the high- tech hub."

South Korea's government encourages this outward movement as a way to reduce traffic congestion and escalating real estate prices in the city center. Construction is under way for a highway and bridge that will connect this manufacturing center with Inchon International Airport, cutting truck travel time to 40 minutes from two hours.

In carefully controlled projects, a trickle of the construction investment is flowing through corridors in the DMZ and into joint venture projects on the northern side. South Korea is building a new road and railroad across the border, and an arm of the South Korean conglomerate Hyundai has built a tourist playground mainly attracting South Korean tourists just a few kilometers into North Korea. About 30 kilometers northeast of here, in Kaesong, North Korea, Hyundai is building an industrial park. About 15 South Korean companies operate there, employing a Korean-speaking labor force that works for some of the lowest wages in Northeast Asia.

"I don't think there is any more security concern," said Chae Su Chon, an economist and a governing party National Assembly member from South Cholla, a province 400 kilometers south of the border. Noting that banks are lending money for projects up the southern edge of the inter-Korean border, he said: "The market is very efficient. Banks have set up branches around Paju. Small business loans have increased."

The next step is vacation homes along the southern edge of the DMZ.

"People are coming up from Seoul to build houses," said Kim Chang Yong, a local real estate agent. "We would like to build vacation homes."

Kim said development could not be stopped. "We are a small country," he said. "We can't restrict development."

In the geographical gap where North Korean tanks once rolled south, South Korean bulldozers may soon be rumbling north.

Source: International Herald Tribune

More News in this Category