Corporate Land Transactions Surge Just Before New Town Announcement... Hidden Channels for Nominee Land Speculation Revealed

"Who Buys Land Speculation Under Real Names?"
Government Investigation Focuses on Employees' Personal Real Names, Limitation
"More Proxy Transactions Likely Through Corporations," Pointed Out

On the 10th, saplings such as Salix koreensis were planted on a piece of land in Mujinae-dong, Siheung-si, Gyeonggi-do, where allegations of land speculation by some employees of Korea Land and Housing Corporation (LH) in the Gwangmyeong and Siheung new towns have been raised.
Siheung - Photo by Kim Hyun-min kimhyun81@

Before the designation of the 3rd phase new towns, it has been confirmed that land transactions under both individual and corporate names increased sharply. This suggests a high possibility that speculation in these areas was conducted not only under the names of employees of the Korea Land and Housing Corporation (LH) but also through nominee accounts using corporate names. In particular, there are concerns that such land purchases under corporate names are unlikely to be revealed through government investigations using personal information, making it difficult to uncover speculation suspicions.

According to the Korea Real Estate Board's statistical information system on the 11th, the volume of pure land (excluding buildings) transactions under corporate names in Gyeyang-gu, Incheon, surged to 218 parcels in November 2018, about 24 times the 9 parcels recorded the previous month. The volume of corporate land transactions in this area remained in double digits, with 10 parcels in August and 14 parcels in September, but increased significantly ahead of the new town designation announcement in December.

A similar situation was observed in Namyangju Wangsuk, which was designated as a new town during the same period. Corporate land transactions were 132 parcels in August, 146 parcels in September, and 96 parcels in October, then sharply increased to 263 parcels in November.

The 3rd phase new towns Goyang Changneung and Bucheon Daejang, announced by the government in the second round last May, showed the same trend. Corporate transactions in Deogyang-gu, Goyang-si, where Goyang Changneung is located, were 25 parcels in February last year, 11 parcels in March, and 21 parcels in April, then surged to 70 parcels in May. The volume of pure land transactions under corporate names in Bucheon also showed an increasing trend ahead of the new town announcement, with 1 parcel in February, 18 parcels in March, and 29 parcels in April last year.

The government launched a joint investigation team to probe land speculation suspicions related to the 3rd phase new towns and included up to 100,000 people in the investigation target. However, considering that the primary investigation focuses on individual public officials' names, there are criticisms that it is limited in uncovering nominee transactions through corporations.

When land is traded through corporations, it is easy to conceal the real names of individual employees in transaction records. In this case, LH employees were caught in the surveillance net because they purchased land under their real names, but most 'professional speculators' conduct nominee transactions through corporate names. There are even testimonies that retired and current LH employees joined forces to establish corporations and purchase land in the Gwangmyeong-Siheung new town area.

A real estate industry official said, "In this Gwangmyeong-Siheung speculation scandal, LH employees bought land under their own and their spouses' names, which is considered a 'novice' method," adding, "Nominee transactions through corporations or acquaintances with no blood relation are overwhelmingly more common."

On the 9th, at the National Assembly Land, Infrastructure and Transport Committee, criticism of this issue poured in from both ruling and opposition parties. Democratic Party lawmaker Jo O-seop said, "Who would actually speculate in land under their real name?" and lawmaker Jang Kyung-tae also said, "I believe there is no speculation under their own name." People Power Party lawmaker Kim Sang-hoon pointed out, "Since land is bought under the names of acquaintances or family members, the current joint investigation by the government cannot approach the truth."