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Koreans Find Prime Property Near the DMZ

By JAMES BROOKE
Published: January 15, 2006

PAJU, South Korea - Six miles from the heavily mined and guarded zone that divides North Korea from South Korea, workers at LG.Philips LCD are starting to produce liquid-crystal display screens at a new $5 billion plant. 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 65-acre language-teaching theme park, will open in March.



For two generations, the 30 miles between the demilitarized zone and Seoul were intentionally kept sparsely developed, a kind of buffer zone against a North Korean attack. But the political détente 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, a country smaller than Virginia, and by an economy that looks to cap costs and 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 Korean wages in the direction of 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 like 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 army draftees 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 miles 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 15 miles 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."

Skeptics, often in faraway Washington, have lampooned South Koreans as latte-sipping Athenians who deny the reality of their northern cousins, unreconstructed Spartans.

http://www.nytimes.com/2006/01/15/business/yourmoney/15dmz.html