North Korean people's demand for better houses will create as much as 77 trillion won ($68.1 billion) in additional construction investment between 2021 and 2030 if the reclusive country fully opens its market, a report said Tuesday.
According to the report published by the Bank of Korea, North Korea's new construction investment could reach 65 trillion won from 2011-20, with a 0.6 percent rise in housing demand.
In the following 10 years, the country's housing demand will likely slow down to 0.3 percent due partly to slower pace of population growth and aging, while 57 trillion won worth of construction investment will be made over the 2021-30 period.
But the report noted that the figures are expected to expand further over the next decade if the North Korean regime opens its market fully around 2021.
(Yonhap)
"Based on many pragmatic cases, the opening of the market usually comes with an upgrade in quality of life, such as a drop in infant mortality. It will lead to a growth in household income and housing demand," said author Lee Joo-yung, a senior economist at the BOK. "As a result, the report assumes that the market opening will help North Koreans' demand for new houses increase by an additional 0.6-1.8 percentage points on annual average."
If the North pulled off a 1.8 percentage point expansion in its housing demand in the 2021-30 period, its construction investment would likely reach 134 trillion won, 77 trillion won more than under the closed-market scenario.
If housing demand grows an annual 0.6 percent over the cited period, construction investment is expected to reach 85 trillion won, up 28 trillion won from the original estimate, the report added.
"When North Korea opens its market full swing sometime in the future, its housing demand will increase widely," said Lee. "More housing construction investment will be needed than is currently projected." (Yonhap)
