Chapter 1590: A Crazy Decision

Zhao Fusheng genuinely admired Roh Moo-hyun. A high school graduate who became a human rights lawyer and eventually the president of South Korea—it was nothing short of legendary.

But some things cannot be changed simply because a person has good character.

What led to President Roh's downfall was his decision to wield the knife against the chaebols' preserve: the real estate industry.

It must be understood that the development of South Korea's real estate industry is closely tied to its domestic economic growth.

The so-called Miracle on the Han River, once hailed as proof of South Korea's economic takeoff, was, in essence, a massive real estate development project. Only after that did South Korea truly begin its ascent as one of the Four Asian Tigers.

Zhao Fusheng's residence.

"Chairman, I'll be accompanying you for the time being. If you need anything, just let me know."

A woman in a business suit stood beside Zhao Fusheng and spoke.

Yes, a woman in a business suit.

"Your Chinese is quite good, Miss Park Sun-young."

Zhao Fusheng smiled and said to her.

"You flatter me."

Park Sun-young replied respectfully.

She was the head of the secretarial office at Hanxing Investment, a trusted subordinate of Liang Jingyu, sent to serve Zhao Fusheng well.

As for this boss, Park Sun-young knew his background. After all, since he was her ultimate superior, and Liang Jingyu had mentioned Zhao Fusheng's name more than once, she had taken the trouble to look up his information.

And then she was stunned!

Gold Medal Strategist!

Built from scratch!

Net worth in the tens of billions!

Every piece of information left Park Sun-young astonished. She felt as if she were watching a legendary movie.

Under thirty years old, with a net worth of hundreds of billions of won—this completely shattered Park Sun-young's worldview!

So, when facing Zhao Fusheng, she was genuinely nervous.

"Miss Park, could you please gather data on the Seoul real estate market from recent years? I'd like to take a look." Zhao Fusheng smiled and said to Park Sun-young amiably.

"Ah, yes."

Hearing Zhao Fusheng's words, Park Sun-young quickly nodded.

Seeing her flustered look, Zhao Fusheng shook his head: "Don't be nervous. I'm usually not very demanding. You don't need to worry."

With that, he walked straight in.

...

...

The next day, Zhao Fusheng received the materials Park Sun-young had delivered.

In fact, like China, South Korea has a large population but limited land. However, based on the latest population density statistics, South Korea's population density is nearly three times that of China.

The tension over land determines that South Korea's real estate industry has low supply elasticity and high demand elasticity. Over the past few decades, South Korea has experienced rapid economic growth, a baby boom, and large-scale urbanization, leading to explosive growth in demand for the real estate industry, which has driven housing prices to soar.

After decades of skyrocketing housing prices, the South Korean government, on the basis of existing real estate regulation policies, also introduced tax reforms on property holding, such as property tax. The implementation of property tax increased the cost for owners of multiple homes, to some extent increasing supply in the real estate market and alleviating pressure on home purchases.

Starting in 2004, policy shifted from support to controlling the real estate bubble. The then Roh Moo-hyun government introduced a series of measures to curb housing prices.

Just at the beginning of this year, the Roh Moo-hyun government again raised the capital gains tax to 60 percent. However, the new policy not only failed to curb high housing prices but instead kept them stubbornly high.

In particular, the increase in capital gains tax made owners of multiple homes prefer to pay high personal real estate taxes rather than sell their houses easily. The reduction in the number of housing transactions also fueled the rapid rise in housing prices from another angle. From 2005 to 2006, South Korea's average housing prices rose by 13 percent, and in Seoul, the increase was even over 24 percent.

With the slowdown of South Korea's economic growth and the near completion of urbanization, the South Korean real estate industry entered a phase of low growth again at the end of 2006. Although the South Korean government adopted a series of policies to relax and even stimulate real estate to revive the economy after the subprime mortgage crisis, housing prices did not experience explosive growth again.

Currently, the general rise is gone, regional differentiation is evident, and the risk of a real estate bubble still exists. However, given the lack of investment opportunities in the real economy, the South Korean real estate market remains hot. Of course, their policies toward real estate developers are also quite interesting: if investment in South Korean real estate and tourism exceeds $20 million, investors can enjoy a seven-year income tax exemption, along with many additional discounts on land purchase prices.

In recent years, China's investment in South Korea has grown by 80 percent, concentrated in the tertiary sector—real estate, finance, and wholesale and retail. In the past few years, foreign investors have participated in more than half of South Korea's commercial real estate transactions, the first time in recent history.

Currently, the trend of Chinese immigrating to South Korea through real estate investment is not significant. Although there is an upward trend, it remains under control due to increasingly strict requirements for overseas immigration.

Zhao Fusheng was not clear about the pros and cons of many specific South Korean real estate projects, but in his view, their rather interesting housing price wave show and their series of serious regulatory policies were undoubtedly very risky.

In other words, if things continue as they are, it is very likely that a real estate bubble will reappear in the end.

Of course, this has nothing to do with Zhao Fusheng.

"According to our survey data, housing prices in Seoul have started to decline in the past two months."

Standing before Zhao Fusheng, Park Sun-young said cautiously.

"This is just the beginning."

Zhao Fusheng said calmly.

From the data Park Sun-young had brought him, housing prices in Seoul—or more precisely, the entire South Korean real estate industry—had begun to collapse.

Although it is a developed country, South Korea's economic growth rate has slowed, yet housing prices remain stubbornly high. Such an outcome will inevitably cause social instability.

Even though Roh Moo-hyun tried hard to implement some reforms against the chaebols, it was still a drop in the bucket in the face of their powerful forces.

With a sigh, Zhao Fusheng recalled several articles he had read in later years and had to admit that Roh Moo-hyun was a good person, but his personality, or perhaps his way of thinking, was not really suited to being president.

On the contrary, his top aide, Mr. Lee, who would later avenge him, was truly cut out for politics.

"Notify your President Liang to start withdrawing capital now. Sell off all the land we hold."

Zhao Fusheng thought for a moment and instructed Park Sun-young.

"Now?"

Park Sun-young was startled and asked reflexively.

Clearly, she had not expected Zhao Fusheng to make such a decision.

Zhao Fusheng smiled slightly: "Of course, right now."

Under these circumstances, the entire South Korean real estate industry was about to collapse, and land would soon become worthless. Zhao Fusheng felt there was no need for Hanxing Investment to hold a large amount of land. Apart from the property he owned himself, all other land and buildings could be put up for sale.

After a moment's thought, Zhao Fusheng continued: "Including the building we are currently living in—it must also be sold."

Park Sun-young was completely dumbfounded. She could not understand Zhao Fusheng's logic at all. What kind of reasoning was this? After reading a piece of data, he made such a decision. Was the chairman crazy?

Of course, Zhao Fusheng was not crazy. In his view, making this decision now was already somewhat late, because the South Korean real estate market was already collapsing, and he was afraid there might not be enough time for Liang Jingyu to sell off so much land.

Watching Park Sun-young go to call Liang Jingyu, Zhao Fusheng sat there pondering. Perhaps he could consider staying in South Korea a while longer to observe the situation more closely.