North Korea's Black-Market Housing

North Korea's thriving black-market economy now includes real estate.

north-korea-building PYONGYANG, North Korea: Portrait of former leader Kim Il Sung in the North Korean capital, Feb. 27, 2008.
SEOUL—Officials in cash-strapped North Korea are profiting from a thriving black market in real estate to boost their meager incomes and secure a comfortable retirement, North Korean and Chinese sources say.

Central authorities are investigating the practice in all of North Korea’s major cities and have confiscated the homes of “dozens” of local officials in the city of Chongjin, one well-informed source who asked not to be named said.

Private ownership or sale of homes is forbidden by the North Korean state, which assigns dwellings to its citizens based on its own determination of need.

“Most government officials build their residences in the North Korean equivalent of suburbs, in areas that are close to the city but still have a rural flavor,” the source, a Chinese merchant who does business in North Korea, said.

“They sell them when they retire.”

“If someone sells a 50-pyong (1,800-square foot) house in such an upscale neighborhood, he can then buy a house that is three or four times bigger in a different area,” the merchant said.

Party and state officials receive permits and order state-run construction companies to build homes in suburban areas near the sea, the merchant said.

He added that the value of real estate privately sold in North Korean port cities is now appreciating at twice the rate of real estate sold elsewhere in the country.

High-quality materials

High-quality materials, including expensive appliances and wallpaper, are often used in the building of officials’ homes, according to a North Korean defector originally from Chongjin but now living in South Korea.

“Small but elegant” patios are sometimes also included, he said.

To justify the construction and occupancy of a larger space, local officials build multi-unit structures and fill them with relatives or people of more modest means, the defector said. 

When the officials retire, they pay the other occupants to move and then sell the entire structure.

North Korean authorities have now sent “task forces” to each of North Korea’s major cities to investigate real estate deals by local officials, the border merchant said, adding that a 40-member group was recently sent to Chongjin, where the homes of dozens of officials were seized.

An official in the city’s Songpyong Ward has reportedly been demoted and reassigned to a more backward part of the country, and fines equal to the actual value of transactions have been imposed on citizens who bought or sold homes.

Tightly closed North Korea has one of the world’s last centrally planned economies.

Since the collapse of the Soviet Union and the end of subsidies from Moscow, the economy has shrunk and black markets have taken root in a number of sectors.

Original reporting Jung Young for RFA’s Korean service. Korean service director: Francis Huh. Translated by Greg Scarlatoiu and edited by Sooil Chun. Written in English by Richard Finney. Edited by Sarah Jackson-Han.


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