Korean Job Discussion Forums

[btsmrtfan]

I am contemplating relocating to South Korea and would appreciate comments regarding the outlook for the future of the South Korean economy what with the Hanjin Shipping bankruptcy, Samsung Note 7 recall and the North Koreans increasingly detonating nuclear devices?

[coralreefer_1]

In the long run, it might be ok. Lots like to gripe about the economy but the numbers dont lie over the past few generations.

With that said, crap is about to hit the fan in the next few years. I dont mean batteries or hanjin, but rather the volatile situation here in the area not only with N. Korea, but with chinese and ongoing disputes with nearly all of its neighbors....japan beginning to regrow the pair of balls it lost 50 years ago, elections coming up, a growing consensus by the public and government that family run chaebols need to and eventually will be split up...etc etc.

I wouldnt call it " bleak"...but many indicators are pointing to a serious gut check. I've been here 12 years now and usually one to give a pass to current events when others say the sky is falling...but seriously im in the process of liquidating and moving out my assets and cash.

Note that doesnt mean a warning not to come. For a short stint or otherwise no real/heavy investment in the economy...there is little to fear.

[chopstick]

Coral Reefer: would all those factors make buying a house in Korea a bad idea? I always here the bubble is going to burst but where we are it seems not to.

[coralreefer_1]

[tophatcat]

[PRagic]

OP, relocating permanently? Or for a predetermined stint?

Samsung has a lot of sway on the Korean market, so with the Galaxy fiasco, there has been a sell off. This has had a weakening impact on the won.

Just prior, however, Korea had it's status upgraded, and that contributed to a market push and a corresponding strengthening of the won. That, plus Korea isn't as exposed to Brexit as companies from neighboring Japan, and the Fed got cold feet.

Look for the won to weaken further when (ok, if) the Fed bumps up rates in December. Before then? Depending on appetite for risk, the market could improve and the won could strengthen short term. Timing could be key, though, as we're looking at at least two more quarters to realize the Galaxy recall impact on Samsung's bottom line. Institutional investors could just as easily decide to load up when Samsung stock is at a discount. I know I'm thinking about it lol.

The business with the meatball up north has little to no impact on the Korean market. It's factored in, and, in fact, part of the reason for Korea's soverign rating bump was a lack of perceived impact. Larger in geographic scope, the S. China sea business could send ripples through markets, but, frankly, I think the presidential election in the US will have a bigger impact.

Real estate? Wouldn't touch it. If you're in Seoul, though, and if you're gonig to be here very long term with a family, you're damned if you do and damned if you don't. While other urban centers will most likely see a decline given supply and demand forces (over building and lousy demographics), Seoul is usually comparatively stable.

Having said this, there was a creeping loss in Seoul real estate values for nearly six years running. But it was quiet. People sat on their properties. You could literally see agents folding left and right. Count on the Korean government, though, to try and controll everything, especially because SO much wealth, and therefore so many votes, are connected to property here. Equities are a crap shoot, so money goes into property.

I say damned if you do and damned if you don't for a couple of reasons. First, if you're not buying, you're renting, and rents are at all time highs and may even move up before any bubble pops. The frontload chunsae system has all but dried up for anything of decent size in decent areas. You defintely don't get much for your money.

Now, IF you want to buy, and you're not looking to drop, say, half a million minimum to a million or more (US denero) on an apartment, then you're probably looking at villas. These may run 200-400, but they'll be in a decent area and crappy, or they'll be off the beaten path and OK. But then the resale will be a factor, and don't be looking to make any coin off of the transaction in that case. Korea's buy apartments because they're more centrally located and because they're easier to rent and/or flip down the road.

If you're going to be here long term, and if you don't have debt or other obligations that necessitate sending money 'back home' (wherever that may be), then you'll simply be living on the economy and you can worry about the exchange rate as you go. When the won is weak, leave it here. When it's strong (under 1,100/USD as of late), exchange and send some back. You'll be in the same boat as everyone else here, most pissed off about the price of produce, milk, meat, etc.

[PRagic]

Apologies, but I should add that those prices are indicative of 3 bedroom apartments. You can get 1 and 2 bedroom shoe boxes for less, of course. All boils down to personal needs and preferences.

coralreefer_1 gave some spot on advice IMHO.

[btsmrtfan]

Thanks for all the helpful info. Lots and lots to think about and I may be asking some specific questions after I give everything some more thought.

[Lazio]

[PRagic]

In a sense you're right given the fact that chunsae can now amount to as much as 70-90% of a property's value. But there would have to be a monster tank in the real estate market, and you'd have to be unfortunate enough to have rented from someone who is overextended.

Back when the Asian financial crisis hit in mid 2007, things tanked. By 2008, tenants were demanding up to 10, sometimes 20 percent of their chunsae be refunded. If your landlord was liquid, you'd get some money back. We did. If not, you were stuck in your unit until the market settled down, rates returned to about the same as pre-crisis levels, and someone new was looking to move in (thereby paying your chunsae back).

If you're on chunsae, you're not paying taxes and you're not paying upkeep, and you're not subject to longer term depreciation in property values. It's a personal decision. Personally, we've never wanted to be on the hook for a domitstile here. We bought land about 18 years ago, but that's about it. Our investments are mostly in the US.