The new governor of South Korea’s Jeju island has decided that Chinese property projects in the gambling mecca, including a $2.2 billion casino and a 63-storey resort tower, need a second look and this could mean trouble for some mainland investors.
According to Shanghai’s National Business Daily, Won Hee-ryong, the governor-elect of the island 533 kilometres (331 miles) from China’s commercial capital has branded Chinese projects there as “speculative capital” and ordered that existing projects be re-screened and new projects be subjected to greater scrutiny. Won has also announced that requirements for the island’s investor visa program would also be tightened as part of the review.
The projects subject to renew scrutiny include a Singapore-Chinese joint venture casino and a $900 million venture by Shanghai’s Greenland Group.
Genting-Landing Holding Gaming JV Could Lose Out
Jeju has recently attracted a number of major Chinese real estate investment projects as the country’s property developers look for opportunities overseas and speculators dream of attracting Chinese newly wealthy classes to the island’s casinos.
During February this year little known Chinese developer Anhui Landing Holding Group partnered with Genting Singapore, the developer of Singapore’s Resorts World Sentosa casino, to put together an “integrated resort” project on the largely self-governing island. Then in May the partners signed a memorandum of understanding with a Korean company to develop Resorts World Jeju as a gambling destination.
Last week, just days before a scheduled groundbreaking ceremony for the $2.2 billion project, Genting Singapore issued a statement saying that the project had been delayed to “allow the company the opportunity to brief the newly elected governor of Jeju and his team on the casino’s development plans and its contribution to Jeju Island.”
Landing Holding’s boss seems to have already made his own alternative plans, having recently redirected part of $85 million raised for the project into securing himself a $53 million private jet, and to pay off some of his debts for projects in Hunan.
Greenland Group’s Jeju Dream Tower Also Up in the Air
Shanghai-based Greenland Group, which has perhaps China’s most aggressive overseas real estate investor said that its plans for a 63-storey resort complex on the island may be affected by the resorts island’s new regime and that it has retained location lawyers to look into the risks.
South Korean media is reporting that the high rise Jeju Dream Tower or “Twin Building,” which was announced in December last year as a joint venture with local conglomerate Lotte Group has failed to make progress.
Jeju Investor Visa Requirements Raised
In addition to reviewing the construction projects, on June 20th the island’s new administration raised the minimum investment to qualify for its investor visa program, which had become popular with wealthy mainlanders. Whereas earlier requirements specified a theshold of 500 million Korean won (S\$490,000) in property investment to qualify for residency, the program now has added an additional requirement of purchasing 500 million won in development bonds.
The influx of Chinese nationals to Jeju has apparently caused a backlash from local residents who resented the new arrivals use of education and other services on the island.