[Inside Chodong] What Drove Them to Become the Gangnam Expedition Team?

Desire for Asset Growth Through Gangnam Real Estate
An Inevitable Choice Within the Logic of Capitalism

Kim Jin-tae, Governor of Gangwon Special Self-Governing Province, saw the value of his apartment in Daechi-dong, Gangnam-gu, Seoul, which he owns with his wife, increase by 67 million KRW in one year. Considering the average annual salary of office workers is about 43 million KRW (National Tax Service, 2023 average total salary), the apartment alone created more value in one year than most adults who put in their full labor. Similarly, Jeong Gwang-yeol, Deputy Governor for Economic Affairs of Gangwon Province and a fellow native of Chuncheon who worked for Samsung for many years, saw his Apgujeong apartment increase by 101 million KRW in one year.

This is only based on the official land price used for taxation purposes, and the actual market value recognized by the market far exceeds this. According to actual transaction records, apartments of the same size as Governor Kim’s Daechi-dong apartment were traded for more than 200 million KRW higher than a year ago, and apartments like Deputy Governor Jeong’s were traded at prices 700 million KRW higher. The Dogok-dong apartment owned by Gyeonggi Province Governor Kim Dong-yeon’s family and the Jamsil apartment of Mayor Park Nam-seo of Yeongju also increased in official value by tens of millions to hundreds of millions of KRW.

Local government heads are also increasing their assets through real estate in Gangnam, outside their jurisdictions. In the same context, when Seoul lifted the land transaction permission zone system (Toheoje) in February, investors flocked in, which can be seen as a very rational response. Scenes where investors contact real estate agencies, find out the account numbers of sellers, and send deposits without asking questions are unfamiliar. However, it is understandable since hesitation could easily lead to others beating them to the deal.

There are groups criticizing asset growth through real estate price gains as unearned income. There are also policymakers struggling to determine the appropriate level of taxation on this. Meanwhile, diligent investors continue to actively visit sites and make transactions to grow their pockets.

Seoul Mayor Oh Se-hoon’s determination to correct the land transaction permission system was commendable. However, there was a lack of consideration about the individual desire to increase wealth and the collective wave of such desires and how it would steer our society. There seemed to be no other means to satisfy the concentrated desire to increase assets besides Gangnam apartments. For years, conditions have forced people to focus on a ‘smart’ single home by tightening loans and raising taxes targeting multi-homeowners. The domestic stock market has been calling for value-up for years, but it sounds like an empty cry. The U.S. stock market, which had a good atmosphere around the time of President Donald Trump’s inauguration, plummeted due to the tariff war. Virtual assets, which are said to have good returns, feel like a distant, unrelated world.

The lifting of the land transaction permission system, led by Mayor Oh, became a trigger for these desires to explode into the real estate market. But can we blame the desire to make money and increase wealth through real estate? In modern capitalist society, where asset growth is the highest value, it is impossible to prevent individuals from increasing their resources within established rules. From each person’s perspective, these are perfectly rational decisions.

However, even if it is a rational choice on an individual level, when it grows into a collective phenomenon, it flows in less desirable directions. Money tied up in real estate dries up domestic consumption and shrinks investment for productive activities. As of the end of last year, South Korea’s real estate risk exposure exceeded 4,000 trillion KRW. If our society is rife with a culture where people must endure inhumane treatment simply because they lack money, it might be hard to criticize such active profit-seeking behavior. But can we confidently say our society is not such a group? It is not easy to give a straightforward answer.

Choi Dae-yeol, Deputy Director, Construction and Real Estate Department

This content was produced with the assistance of AI translation services.