Sunday, January 13, 2008

Apartment Hunting

Korean Mother has to move. She doesn't want to but amidst everything else which has been going on recently a problem has come to a head in the last few weeks which has consequences for her apartment, so she has to sell it quickly. I might go into the details one day but suffice to say it is complicated, and I've learned it is wise to be extremely cautious of Korean property deals because of it.

For reasons I'll also leave somewhat opaque for now, my wife and I decided to move in together with her at a new place, which means we're leaving our one-room apartment which has been our home for these past 15 months since I arrived in Korea. Before I came here, I wouldn't have imagined I could live with my wife's parents - even though such arrangements are quite common in this country. In fact, everyone here had expected that we would, and it had been an option, but we both wanted our own place and we haven't regretted that. But now that I know Korean Mother well, and with Korean Father, who's nice enough but can be a little overbearing at times, living down in Namhae to take care of his father, I think it will be fine. Plus, as I can only communicate with her in Korean, which she never tires of trying to teach me even if it is Busan dialect, it may even help my progress with the language. But when all's said and done, it's a move largely borne out of necessity at this point, so like it or not, fate has thrust us together amidst a maelstrom of events beyond our control.

She'd already sold her apartment, receiving what would have been the equivalent of a five-figure deposit in my own currency, which to my slight alarm she proceeded to carry with her today as we went on the hunt for a new place, which we had to locate with some urgency given that she had four-weeks to move out.

Apartment Number One was on the 15th floor of a building one stop away on the subway. It had four bedrooms as opposed to the three in Korean Mother's apartment, but was only slightly larger at 39 pyeong (a Korean unit of measurement) as opposed to 35. Korea's trying to move away from the pyeong in favour of the square meter, but away from the Government in the real world, everyone still seems to use the pyeong. Somewhat disconcertingly, with the exception of the extra rooms, the apartment layout was very similar to Korean Mother's - to the point at which there was little difference to tell between the kitchen and lounge areas. But unlike Korean Mother's existing apartment, each room had a balcony about four feet wide, which were arguably not wide enough to do anything useful with and yet which served to lessen the feeling of size of the rooms considerably. In the estate agent's office, an artist's impression of the apartment from the original build was pinned to the wall, which rather optimistically depicted a small table for two on one of the said balcony's. I'm sure it looked great in the original brochures. But we decided the apartment was acceptable, as long as the owner redecorated; their children had drawn and written all over the walls - apparently with impunity.

Apartment Number Two was in what the Koreans would call an old building - over 30 years old (back home, city centre apartments are often in buildings 100-150 years old and we think little of it). So the building may have a bit of a stigma to it, even if when it was put up it was considered the height of luxury for the well-to-do and at 55 pyeong, a size to match. I loved the name - it was called 'Freedom' - a little ironic considering it was built when Korea was governed by a military dictatorship. Unfortunately it was on the ground floor, and Korean Mother wanted a view, but with time short and opportunities few and far between, we had to look. We got there with the estate agent and the owner rushed back to meet us, tapping her code into the apartment door's keypad before we went in, at which point I realised that these keypads aren't such a good idea when you're opening the door with complete strangers standing behind you. Another four-bedroom affair, Apartment Two would best be described as cavernous, but in common with many lower-floor Korean apartments, it had bars over all the windows, giving it a sort of community prison feel.

It's odd because I don't get the impression that property crime is as big a problem here as it undoubtedly is in the UK, where we usually don't put bars over ground floor windows - although it may be impossible because of fire regulations. The trees growing outside many of the windows detracted from the bars a little, but also made it quite dark inside. The lack of light reminded me of some of the houses back home. In common with the first apartment, it had a piano in one of the rooms and there were a lot of books - I couldn't help noticing the complete collection of The Encylopedia Britannica. Middle class.

Apartment Number Three was another four-bedroom 55-pyeong apartment was available in Freedom on the 6th floor, so we looked while we were there. Oddly, despite the elevation it wasn't much lighter inside, although copious amounts of dark wood did nothing to help. The décor was very expensive. In fact, there was something oddly familiar about the place that I couldn't quite put my finger on, until I saw an overly large Roman-numeral clock with expensive canvas backing hanging on the wall, and then I knew where I'd seen this all before - in 1980s British catalogues selling interior dreams of dark-wooded and leather furniture, thick heavy curtains and beds built like tanks. It dripped money and designer lifestyle - albeit from a time twenty years ago in my country (we've gravitated towards the aesthetically clean IKEA look these days) - and all that was missing was the page numbers in the corner of the rooms. The owner told us he'd spent £50,000 (about 91.8 million won) on decorating and furnishing it when he'd moved in a few years ago, and I could believe it. It was no surprise when we found the room with the piano.

The first two apartments were rentals but the third was to purchase, so that was potentially more complicated - but it didn't matter because Korean Mother didn't like it. Her favourite was Apartment Two on the ground floor, but the maintenance charge was £200 (367,000 won) per month as opposed to £70 (128,000 won) with the first one. These probably sound ridiculously cheap when you consider there's no rent on top - for the uninitiated this is how a lot of Korean apartment rentals work: you put down a really large deposit - it could even be half-to-three-quarters the cost of buying the apartment outright - but then there's little or no rent to pay, although there's normally a maintenance charge payable to the building owners. When you move out, usually after a minimum two-year contract, you get the deposit back. Now I'm a stock-market trader and by necessity I can price companies and evaluate business models at speed, but in the two years I've known about the way Korean apartments are rented I still can't quite get my head around it in the same way I can't understand how anyone seriously thought that mortgage-backed Collateralized Debt Obligations were basically sound financial products. I mean, you own an apartment, you rent it to someone, collect their deposit, don't take rent, and then when they leave, pay it them back.

So you make whatever you can with the money - from interest, investments or 'pyramidding' into other properties before returning the money. And if you lose it or can't pay it back? Well the tenant keeps the apartment until you do, which doesn't exactly seem entirely suitable from their perspective if they need to move. On the other hand, I suppose as a landlord if you're making 5% interest from £100,000 (183 million won) every year then you're doing OK. It's not nearly as much as you'd normally make from renting out a British apartment worth £150,000 by the month, but this is clearly a business model which works in Korea. Still, it seems it's a model which has the potential to suffer a cascading collapse in any serious economic downturn depending on what landlords are doing with deposit money. When my wife and I came to Korea we didn't have the luxury of taking a chance on tying ourselves into such a contract, we rented our apartment for £163 (300,000 won) per month with a minimal deposit of about £2,700 (5 million won) - it's less than half the price that a similar apartment would have cost in the UK and we weren't planning on staying here for two years... although obviously that's working out differently.

So even if Apartment Two was Korean Mother's favourite, it seems we weren't destined to live in Freedom (that figures), so Apartment One it was. We went back to the estate agent's office and the deal was done. We move at the end of this month in a date selected by a fortune teller she went to see as the best choice in the narrow window available. The fortune teller wasn't so lucky with their other recommendation though - that Korean Mother's karma would be best suited living in the Daeshindong area of Busan - we're moving to Goejeong.

I'm going to miss our 'one-room' and I'm not looking forward to the move at all - even if we don't have a lot of things, but I think this will be a good thing on the whole. If we lose our legal case back in the UK on the 28th I will have to return home for a while to sell my house and resolve all the other aspects of my British life which I will no longer have - so I'm glad my wife will now be living with her mother and not alone in our apartment for the six months or more I'm likely to be away. Even if we win, now my father's dead there's no longer a pressing rush to return home immediately on expensive short-notice flights, so we'll book in advance and make sure Korean Mother's properly settled into the new place before we go.

Korean keywords: , 아파트

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