Chapter 395 |
Having finished my schedule in California, I headed back to Korea. On the return flight, I thought about the vision I had seen and looked up materials related to real estate.
I arrived home, parked in the underground garage, and took the elevator up. When the door opened, Ellie was standing there.
“I’m home…”
Before I could finish speaking, Ellie pulled me into a hug and kissed me. It’s truly a happy thing to have someone welcome you when you return home.
After a long kiss, Ellie looked me straight in the eyes and asked.
“That woman didn’t do anything, right?”
By "that woman," she must have meant Angelina Tinter, right?
“Of course not. She ran off right from the doorway.”
“How was America? Was it fun?”
“You didn’t miss me?”
“Of course, I missed you.”
“Among the Hollywood stars, who was the prettiest?”
“Ellie, you’re much prettier than all the women there combined.”
“Hmph, liar.”
Though she pouted as if complaining, her eyes were smiling. Her expression was so cute that this time, I kissed her first.
Taekgyu, who had been watching from the side, spoke.
“My friend. Am I perhaps invisible to you?”
***
We had dinner together at home and then sat in the living room.
Ellie opened a bottle of wine, saying it was to celebrate my return. We sat on the living room sofa, watched the news, and drank wine.
Even while drinking, what I had seen in my vision kept replaying in my mind. The TV news reported that Seoul was the 4th most expensive city for foreigners to live in.
Taekgyu asked.
“Is it really that expensive for foreigners to live here?”
Ellie nodded.
“It seems so. Actually, the general cost of living in Seoul isn't that high. But housing costs are on par with most major cities around the world.”
Golden Gate, being a foreign financial firm, has a high proportion of foreign employees. The company subsidizes a portion of their housing costs. That’s how Hyunjoo-noona and Ellie were able to stay at a hotel.
For reference, even now that she has moved out of the hotel and lives with us, the housing allowance continues, and Ellie is said to be diligently saving it.
In any case, the high cost of housing is due to expensive property prices.
This time, I asked.
“From a foreigner’s perspective, are Seoul property prices considered expensive?”
“They are. Still, it’s better than Hong Kong. Hong Kong is truly beyond words. A friend who got married last year bought a studio apartment in Tsim Sha Tsui. Do you know how much it was?”
“How much?”
“10 million. When I asked if that made any sense, they said even old, cramped studios in Tsuen Wan go for 5 million each. Super-luxury homes in places like Victoria Peak or Repulse Bay exceed 2 or 3 billion.”
The currency unit Ellie mentioned was, of course, Hong Kong dollars, not Korean won. 10 million HKD is about 1.5 billion won, and 2 billion HKD is about 300 billion won.
Although Hong Kong’s national income is higher than Korea’s, salaries aren’t drastically different. So, it’s safe to say that it has become impossible for a salaried worker in Hong Kong to buy a home.
Ellie said with a sigh.
“It’s all because of asset parking.”
Asset Parking refers to placing assets in a safe location, much like parking a car in a secure spot.
Developing countries, with their rapid economic growth, produce numerous wealthy individuals. However, keeping that money in their own country feels politically or economically unstable. If something like Korea's past IMF crisis were to occur, a currency devaluation could instantly wipe out more than half of their asset value.
Therefore, they want to move at least some, if not all, of their assets to safe, developed countries, depositing money in US banks or buying Japanese stocks.
Among these, real estate is an excellent way to store large amounts of cash easily and safely. In countries that allow investment immigration, permanent residency can sometimes be obtained based on the real estate purchase amount, and the purchased property can be rented out or used for children's education abroad.
Back in 1999, when the UK announced the handover of Hong Kong to China, many people worried about a collapse in property prices. Indeed, many experts predicted that the economy would crumble and real estate values would fall due to Chinese influence.
However, the result was the exact opposite. This was because Chinese capital flooded into Hong Kong. Wealthy individuals from China rushed to buy homes in Hong Kong, causing property prices to skyrocket.
The real estate appreciation rate after the handover exceeded a staggering 400 percent!
Considering this was the average, in places with high demand, prices rose more than tenfold.
Furthermore, as Chinese people flocked in search of jobs, the housing shortage became severe. Hong Kong, being a city-state, found it difficult to supply additional housing. This led to the emergence of "cage homes"—single units subdivided into multiple tiny living spaces—or micro-apartments of about 3 pyeong (approximately 10 square meters or 100 square feet).
“As the wealthy from emerging nations invest in developed countries' real estate, property prices have soared not only in Hong Kong but also in New York, Seattle, San Francisco, LA, Vancouver, Toronto, Sydney, Melbourne, and London.”
Taekgyu tilted his head.
“Then what about Seoul?”
“Seoul’s real estate prices have also surged, but objectively speaking, it’s not as severe as in other cities.”
Korean real estate is also becoming a target for foreign investment, but investment in residential property, as opposed to commercial, is still not very high.
There are two major factors for this. One is the risk element posed by North Korea, and the second is…
“Because Korea is not an English-speaking country.”
Needless to say, the US, UK, Canada, Australia, and others, and Hong Kong also uses English as an official language. If Korea used English instead of Korean, property prices would likely be tens of percent higher than they are now.
For these reasons, Korea’s residential real estate market is closer to a domestic league than a world league.
Ellie looked at me with slightly unfocused eyes.
“But why do you ask? Jinhoo, you’re not usually very interested in real estate, are you?”
Warren Buffett, known as an investment genius, doesn’t invest much in real estate. He fundamentally believed that stocks offered better returns than real estate, and in his case, they did.
However, that was Warren Buffett's situation; most people consider real estate their most important asset and investment.
Like Warren Buffett, I had also rarely invested in real estate. The only property the company owned was its headquarters building, and I only owned the house I lived in.
I smiled and said.
“Just curious. Seeing the construction in Silicon Valley got me a bit interested.”
***
After putting a tipsy Ellie to bed in her room, I came back down to the living room. Then I woke up Taekgyu, who was about to doze off on the sofa.
“I think we need to move our headquarters.”
Taekgyu replied with his eyes still closed.
“Huh? So suddenly?”
“Well, not immediately.”
“Where to? Abroad?”
“Not abroad, domestically.”
Strictly speaking, this isn’t the headquarters. The legal entity is registered in Delaware, a tax haven, and this is just the Seoul office.
Therefore, moving the headquarters doesn’t mean changing the legal registration, just the building we work in. Nevertheless, if we announce we’re moving, many places would welcome us. It carries that much symbolic weight.
“But why? Isn’t this completely out of the blue?”
Even I thought it was a bit random. In fact, there was no build-up to it at all. But convincing him was a very easy task.
“I had a vision.”
At those words, Taekgyu’s eyes flew open, and he shot upright.
“Really? How long has it been?”
“Tell me about it.”
It had been so long that I was a bit glad too.
“So, what did it say?”
“It said to move OTK Company’s headquarters to another place.”
“Another place? Where?”
Hearing my words, Taekgyu was surprised again.
“What? Move the headquarters there? What’s even there?”
“Nothing.”
If other people heard this, they might think I was crazy. Even I wouldn’t have imagined it if I hadn’t had the vision.
Taekgyu crossed his arms and said.
“So, OTK Company’s headquarters building is just going to stand there all alone in the middle of a vast, empty plain?”
“Surely not. If we’re moving the headquarters, there must be a good reason, right?”
“And what reason is that?”
I stated the conclusion I had reached after much thought.
“What if that place becomes the future center of Korea’s finance and industry?”
“But there’s nothing there.”
I recalled the scenes I had witnessed in America.
Silicon Valley was being rebuilt from scratch. The IT giants that had been headquartered there were burning with the desire to return, willingly pouring in technology and capital.
Silicon Valley would be reborn as a more efficient, eco-friendly, cutting-edge city than it was before its collapse.
“Conversely, if you think about it, because there’s nothing there, we can create everything anew.”
***
After outlining the plan to some extent, I gathered the team leaders and above for a meeting.
I announced it to them like a declaration.
“I’m thinking of creating a new city.”
At my words, everyone except Taekgyu was stunned. Indeed, this wasn't SimCity; suddenly declaring I would build a city must have sounded absurd and bewildering.
After a moment, Team Leader Michael Lee, having composed himself, asked.
“If it’s a new city, what kind of scale are you considering?”
“A population of at least 500,000 to 1 million. Not a satellite city, but a self-sufficient industrial city.”
Once again, everyone was speechless.
“That’s quite a significant scale…”
Since Seoul’s population is 10 million, 500,000 might not seem like much, but in reality, even this size is classified as a large city.
If it exceeds 1 million, it’s practically like creating an entire new metropolitan city.
Sangyeop-sunbae said.
“It’s impossible.”
“Why so?”
“Setting aside other problems, land acquisition alone is impossible. If rumors spread that OTK Company is buying up land, speculators from all over the country—no, the world—will flock to it.”
If a company starts buying shares during a management rights dispute, the stock price skyrockets regardless of fundamentals.
The same applies to real estate. If rumors spread that land is being bought for development, a piece of land worth 100,000 won can become 1 million won in an instant.
“And after people engage in strategic holdouts everywhere, if we try compulsory acquisition, they’ll lie down and shout, ‘Kang Jinhoo is killing people! He’s stealing my land!’ and stage life-or-death protests.”
When developing an area, it’s realistically impossible to purchase all the land. Therefore, typically, if 70-80 percent is acquired, the rest can be compulsorily purchased.
The problem is, it doesn’t always go according to the law. If landowners refuse to leave and dig in their heels, there’s no easy solution.
Inevitably, physical force has to be used to remove them, and various incidents and accidents occur in this process.
Sangyeop-sunbae shook his head.
“The problem is, the whole world knows OTK Company is rich. To meet all the landowners' desired prices, not even 1 quadrillion won, but all the wealth in the world wouldn’t be enough.”
Everyone nodded in agreement at his words. Indeed, strategic holdouts have always been an issue in redevelopment or land development projects.
Team Leader Seo Sangwon said.
“Opposition from local residents to factories or commercial facilities is also a problem. Didn’t Neotin recently withdraw its data center construction plan?”
Neotin had planned to build a data center in Yongin. However, local residents opposed it, claiming that electromagnetic waves would endanger children’s health.
Neotin held several public hearings, explaining that the electromagnetic waves from the data center were below standard levels—even lower than those emitted by smartphones and microwaves—and posed no harm to the human body.
However, residents, citing nearby schools, held large-scale protests.
Whether they genuinely believed it was dangerous or were hoping for other compensation is unknown, but as opposition intensified, Neotin eventually scrapped the data center construction plan.
There are plenty of similar cases abroad.
Amazon originally selected New York for its second headquarters, but due to residents' concerns about soaring property prices and deteriorating living conditions, the project is currently stalled.
Team Leader Seo Sangwon added a remark.
“While trying to resolve land compensation and resident backlash, project costs will snowball. Even for a company like OTK Company, it’s a reckless undertaking for a single enterprise.”
Sangyeop-sunbae continued.
“Even if the government steps in and uses public authority, developing a single residential district takes at least several years. If any casualties occur in the process, public opinion will worsen. Then, the trash reporters will have a field day writing articles about how OTK Company is trampling on the human rights of powerless landowners and forcibly evicting them for its own profit.”
Every word of it was true.
I nodded.
“So, the biggest problems are land acquisition and resident opposition.”
“That’s right.”
“Then, if it’s a place with no landowners and no resident opposition, couldn’t we build a new city?”
At my question, Sangyeop-sunbae looked flabbergasted.
“Where in South Korea is there ownerless land? Unless it fell from the sky or rose up from beneath the ground.”
“There is one such place, isn't there? Land that rose up from beneath.”
“Huh?”
It sounded like a joke, but surprisingly, it was true.
I turned on a map app on my tablet and showed them.
“Right here.”