“Outsiders need to understand Jeju Island culture. When the Jeju Island migration boom began, so-called ‘mainland construction companies’ came in and built expensive properties with a luxury strategy, which led to an increase in unsold properties. That has killed all investment sentiment. If tourism and construction collapse in Jeju Island, it will be a big problem.” (Representative of Jeju Local A Construction Company)
The construction site of 'Hanwha Forena Jeju Edu City' in Daejeong-eup, Seogwipo-si, Jeju, which I visited on June 10, was a quiet rural village with almost no infrastructure around it. It was 10 minutes by car, 20 minutes by public transportation, and nearly an hour on foot from the schools in Jeju English Village. Even on the map, it was quite far from the English Village.
This complex is a 503-unit apartment complex being built by Hanwha Construction. It was scheduled for completion in January 2025 and was sold in September 2022, but it has become the complex with the largest number of unsold units in Jeju Island. As of the end of March, the number of unsold units was 290, which is over 57% of all units. The selling price starts at 670 million won for an exclusive area of 84㎡.
An official from a nearby B certified real estate agency explained, “For Jeju residents, anything over a 20-minute drive away is so far that they might only go there once a year or so.” He continued, “The complex is quite far from the English Village, but it seems they built it thinking that it wouldn’t take too long for people from Seoul, but it was expected that the complex would go unsold from the beginning.”
The reason for the unsold apartments in towns and counties
The Jeju real estate market is not recovering from its slump. The problem of unsold apartments in the city and vacant commercial buildings, as well as empty houses in towns and villages, has surfaced. Local Jeju officials explain that the cause is the reckless development that has been going on for several years due to the “Jeju Living” craze. The analysis is that as demand from outsiders has decreased, investment sentiment has also weakened. According to the Ministry of Land, Infrastructure and Transport, as of the end of April, there were 2,837 unsold houses in Jeju. This is a 14.2% increase from March (2,485 households) and accounts for 4% of the nation’s unsold households. Unsold houses after completion, known as “malicious unsold houses,” account for 43.7% (1,241 households) of all unsold houses. Of the 12,968 unsold houses after completion nationwide, 10% of them are from Jeju. Local real estate officials say that the number of unsold houses has increased significantly in “towns and villages.” This is an explanation that it should be viewed differently from the Shinjeju area, which is the downtown area of Jeju. Looking at Jeju’s unsold houses as of March, unsold houses in towns and townships accounted for 1,735 households, or 69.8%. Aewol-eup had the most with 616 households, followed by Daejeong-eup with 376 households, Andeok-myeon with 293 households, Jochon-eup with 263 households, and Hangyeong-myeon with 185 households.
A representative of the A construction company said, “7-8 years ago, during the Jeju immigration craze, apartments that were built in secluded areas considered rural areas in Jeju lost demand from outsiders and were ignored by local residents, leaving them unsold.” He added, “On average, the selling price for 84㎡ was 400-500 million won, but now that brand complexes are coming into towns and counties, the price has gone up to 700-800 million won.”
In fact, there is a clear difference in the ratio of unsold households in 'dong' and 'eup/myeon' administrative districts. 'The Sharp Yeondong Pore·Nohyeong Pore' in Yeondong, Sinjeju has a relatively small number of unsold households, with 11 households out of 120 total households, but 'Jeju Edu-Lucciola' located in Cheongsu-ri, Hangyeong-myeon still has 48 unsold households out of 99 households even after completion in 2020.
In this situation, the decline in apartment sales prices is also unavoidable. The cumulative apartment sales price fluctuation rate in Jeju Island from January to May this year is -1.17%. It is a greater decline than the national average of -0.73%. Jeju construction industry officials explain that proactive policies are needed to improve investment sentiment first. A Jeju local construction company official said, “Even if it is temporary, it is necessary to ease the acquisition tax, transfer tax, and other multiple homeowner taxes to suit the Jeju situation,” and “The issue of whether to build a second Jeju airport is also being postponed continuously, so there is great policy uncertainty.”
The number of domestic tourists is decreasing, and even the downtown area is deserted due to population outflow.
The commercial district is also frozen. On the afternoon of June 11, the shopping districts along Nuwemaru Street in Yeondong, Jeju City, had “For Rent” signs posted on every other house. From the beginning of the street near Maison Glad Jeju Intersection to Sammu Park Intersection, there were about 17 empty first-floor stores. C, who runs a clothing store in Yeondong that I met that day, said, “Sales have dropped by more than a third since December of last year,” and “There are almost no domestic tourists or Jeju people on the street, only Chinese people, and while the shopping districts are getting emptier, a street selling bone soup, a popular dish among the Chinese, has opened.” The vacancy rate of mid-sized and large-sized stores and multi-storey buildings in the first quarter of this year increased compared to the previous year. The vacancy rate of mid-sized and large-sized stores in Jeju in the first quarter was 8.8%, up 0.4 percentage points from the same period last year (8.4%). The rent remained the same at 14,300 won per square meter. The rental fee for commercial complexes remained the same at 12,000 won per square meter during the same period, but the vacancy rate rose from 11.7% to 15.9%.
On the other hand, the vacancy rate of small stores actually decreased from 5.5% to 3.8%. This is because the preferred store size has become smaller as the number of delivery customers has increased since the COVID-19 pandemic. The increase in the vacancy rate of medium- and large-sized stores and multi-storey shopping malls means that the number of customers visiting the stores in person is decreasing.
While Jeju’s commercial district has been in a slump, the number of commercial real estate auctions in the province, including commercial facilities, has also increased significantly. According to the auction and public auction data provider Jiji Auction, the number of business and commercial facility auctions in Jeju has increased to over 100 since December of last year. Last year, the average was about 60 per month. The number of auctions in April was 165, a 34% increase from March, and the second highest since November 2009, when 207 commercial facility auctions were held.
There is no demand for single-family homes and the number of restaurants and cafes being converted to restaurants and cafes is decreasing.
The number of 'empty houses' is also increasing. Not only unsold apartments and villas, but also single-family houses and rural houses that were popular for remodeling have declined in popularity. There was once a demand for use as guesthouses or cafes, but as the population of Jeju Island continues to flow out, even this demand has decreased. At the entrance to the village in Gosan-ri, Hangyeong-myeon, Jeju-si, an empty house surrounded by overgrown weeds and damaged beyond recognition stands out. It is difficult to even tell if this place was a house in the past unless someone explains it to you. According to a nationwide survey on empty houses conducted by the government in 2023, there are at least 1,257 empty houses in Jeju, and more than 94% of them are in rural areas. However, the number of empty houses estimated by the province is more than double that, at 3,500.
In Jeju, empty houses were once considered popular items for sale. During the “Jeju Living” craze from 2011 to 2016, rural houses were sometimes traded at high prices. Now, the situation is different. Residents say, “There are probably 10 empty houses in each village.” This is because Jeju’s youth and middle-aged population are leaving rural areas, and the aging population has become more evident. Since January of last year, the number of people moving out of Jeju has exceeded the number of people moving in. This is the first time since 2009 that there has been a net population outflow.
Jeju Island is currently conducting a comprehensive survey of houses presumed to be vacant from February to December at the request of the Korea Real Estate Board. The vacant houses subject to the survey are those that have not been inhabited or used for more than a year.
Nam Seong-jun, CEO of Dajayo, a startup that remodels empty houses in Jeju Island into lodging facilities, said, “If administrative or financial support is provided for repair costs and other successful cases of empty house utilization rather than what local governments do, similar empty house utilization projects will become more active.”