Gap Investment
Daechi-dong.
One of the most exclusive wealthy neighborhoods in all of Korea.
Ding-dong~♪
I had come to buy an apartment in this affluent enclave.
I pressed the doorbell and waited a moment.
"You here to look at the place?"
A man who looked to be in his fifties cracked the door open just enough to peer out.
Only his head poked through as he eyed me.
Could you open the damn door properly?
He hadn't even unlatched the security chain.
The wariness rolling off him was thick.
He even looked me up and down.
I was just starting to get annoyed when—
"Hello. I'm Jeon Suhyeon. We had an appointment for three o'clock today. Would it be all right if I took a quick look around your home?"
"Ah, the one who called! Please, come right in."
Suhyeon gave my shoulder a light shove.
The homeowner's face lit up with a bright smile as he opened the door wide.
Well, aren't we suddenly sweet.
A pretty woman.
And dressed in a sharp, immaculate suit that made her look polished and proper.
Trust came easy.
That was exactly why I brought Suhyeon along as my secretary.
"Feel free to look around. Just… try not to make a mess."
He still didn't seem to trust me.
I couldn't exactly blame him.
Was this guy actually going to buy the place?
That kind of doubt was natural.
"Hmm…"
"What do you think?"
"I wouldn't know. But it's a lot more run-down than I expected."
There was a defensive edge to his tone.
Everyone who saw the place must have thought the same thing Suhyeon just said.
It's a forty-year-old apartment, after all.
Decay showed everywhere.
From a landlord's perspective, the urge to haggle the price down came naturally.
"Finished looking?"
"Yes, you've kept it very clean. But in the living room and your son's room…"
"Ah."
"There are quite a few holes and marks. If those were just repaired, it would be fine."
"That would be from when our boy was little."
Even so, I was buying it.
After cutting the price as much as possible.
Talking with a homeowner was a kind of negotiation duel.
Honestly, I could just buy it as-is.
But he had been so prickly, so I threw a few prickly points of my own into the mix.
"The walls and floors are a bit sunken in places. Fixing those would cost quite a bit."
"I-Is that so?"
"I'll get a concrete figure from an interior contractor and let you know. Would that be all right?"
"That much… I can live with."
That knocked about twenty million won off the price.
I would get the estimate from the contractor and then never actually do the work.
Thud!
Negotiation finished, we stepped outside.
He had played the part of a decent citizen who knew nothing about real-estate agent tricks.
"Do we really have to buy a place like this?"
"Why? Don't like it?"
"How could I?"
Suhyeon clearly wasn't thrilled.
She shrugged both hands in open question.
She simply didn't know.
What Daechi-dong meant in the Republic of Korea.
The place was famous for its education fever.
What the drama showed was only a fraction of the real thing.
The higher the university ranking, the more popular the major, the more private tutoring became mandatory.
Medical school, for example.
They say the average student burns through about a billion won.
Private tutors.
Celebrity instructors.
Hearing them lecture required that kind of money.
"Isn't that insane?"
"You got into Hankuk University. Your parents must have spent a few hundred million too."
"Did they?"
It applied to most students in the country.
Even if they themselves didn't realize it.
And she went on early study abroad, of all things.
Quietly, a lot of money went into it.
These days the trend was to start private education even before elementary school.
That was what it took to reach a prestigious university.
The cut-off lines had climbed sky-high.
"There are online lectures too, right?"
"Sure there are."
"I know a kid who only did online lectures…"
"That's the extreme minority."
The media loved to shout about it.
Times had changed, they said.
You could study at home now, they said.
Just pacifiers for the masses.
A dragon rising from a ditch!
They needed to keep the hope of class mobility alive.
That had been pure bullshit for decades already.
The actual statistics had gone completely off the rails long ago.
"Kids who got into college on pure private-education money never raise their hands and yell, ‘I bought my way in with cash!’ So it never becomes a public issue."
"Oh."
No matter how much of a blockhead you were, if you just poured enough money in, it worked.
Seoul National might be a stretch, but Yonsei or Korea University? Easy.
It was an open secret in the industry.
The instructors themselves said it out loud.
In other words, academic credentials could be bought with money.
Which is why.
Daechi-dong.
Gangnam mothers went crazy trying to get in.
Rich people spent money for a reason.
"Still."
"What?"
"It's completely rotten. Why would people with money even want a place like this?"
Suhyeon still wasn't sold.
She said something that would have wounded the homeowner if he had overheard.
Fair enough.
It really wasn't that great.
Baekma Apartment had been completed in 1979—ancient by any standard.
Cracks spidered across the stairwells and outer walls.
With a little exaggeration you could call it a ruin.
"See that clock tower over there?"
"Clock tower?"
"Those only exist on really old apartment complexes."
Traces of the years lingered everywhere.
A clock tower over five meters tall stood in plain view.
The 1970s.
An era when even wristwatches were rare, never mind cell phones.
Knowing the time had not been easy.
So they built the tower.
Now it was a relic whose existence no longer meant anything.
"So how much is this place again?"
"1.4 billion."
"Holy shit."
"And that's after it dropped from 2 billion."
The price had nothing old-fashioned about it.
Inflation had hit it dead center.
Original sale price was twenty million won, they say.
A full hundredfold explosion.
Even accounting for forty years, it was staggering.
"Why would anyone…"
"Pay that kind of cash for this dump?"
"Honestly, I don't get it."
Suhyeon's confusion was understandable.
By any measure it looked absurdly expensive.
This half-collapsed, shabby apartment.
Just because it sat in Daechi-dong?
She needed to understand that yes, it was worth it.
Vrrrm~!
We drove around the neighborhood.
Ordinary commercial buildings and hagwon streets you could find anywhere—except they weren't ordinary.
"I used to go there!"
"See? Your parents spent the money."
"True."
"And you're still reaping the benefits."
"?"
The quality was different.
Every nationally famous instructor could be found right here in Daechi-dong.
The quality really is high.
Maybe that was why Suhyeon herself was so springy and firm.
A well-educated pussy gripped differently from the start.
"Couldn't people just come from other places? I didn't live in Daechi-dong either."
"While spending an hour each way?"
"Ah."
"Exactly."
Those learning years.
The days spent as a student were short.
And every single day was a war of busyness.
That extra hour could be spent studying instead.
That was the reason to live in Daechi-dong.
In short, you were buying time with money.
An hour sounded small, but in terms of efficiency the gap was far more brutal.
Just pour money and you get into college!
That claim did not come out of thin air.
Screech—!
Looking at it again through that lens, even this utterly shabby Baekma Apartment—
"Might actually be insane value?"
"Well, that part is definitely included."
Just for sitting in Daechi-dong, 2 billion was justified.
No—if reconstruction ever happened.
It would moon completely.
The principle of the real-estate market.
Not so different from stocks.
"Expectation" got priced in.
Baekma Apartment Price Trend
1.42 billion ▼580 million (−29%)
[Graph peaking mid-2018 then declining]
That was exactly what had happened.
Prices had climbed steadily alongside the stock-market rally.
Even after the rally stopped.
The reconstruction narrative had fueled one last burn.
"There's no actual reconstruction schedule set, though."
"Sounds like the operators dumping on the retail crowd."
"Pretty much the same idea."
The real-estate market worked the same way.
The ones left holding the bag at the top were always the clueless retail buyers.
Threatening Residents’ Lives for Housing Price Stability—What Nonsense!
We Want to Live Like Human Beings—Wake Up, Seoul Mayor!
All they could do was howl.
That was why giant banners hung on the apartment exterior walls.
"Did the mayor of Seoul do something crazy?"
"Not yet, I think."
"Huh?"
"No, I just mixed up the timing a little."
He hadn't done anything yet. He was going to.
I had almost made a serious mistake.
A principle every stock investor had to keep.
Never fight the market.
It was genuinely important.
That was why residents who had bought real estate on reconstruction hopes were suffering now.
Anyway.
The current mayor of Seoul was stubbornly opposed to reconstruction.
That was what had snuffed out the expectation.
And that, for me, was the opportunity.
The recent downturn had squeezed the real-estate bubble almost dry.
Of course Gangnam was less affected.
In stock terms it was a large-cap, after all.
"But this place dropped hard, right?"
"Different case."
"Oh."
"Bubbles built on pure expectation deflate just as fast."
Baekma Apartment's actual value was low.
Without reconstruction it was pure trash.
But stocks are the same.
Real estate too.
The true bottom was when expectation had completely collapsed.
The catalyst hadn't vanished either.
It was destined to revive someday.
If the economy recovered?
This location plus the reconstruction issue would create the perfect rally.
Screech—!
And I was betting on the economy recovering.
A rising stock market always spilled over into the real economy.
"We scoop everything up before that gets priced in."
"Okay."
"Suhyeon, you have to handle it well in place of Oppa. Got it?"
"And my salary?"
With any asset, the critical factor was always the timing of the buy.
From that angle, this was the optimal moment.
In more ways than one.
The rising market.
The market's own movement.
Korea's deformed real-estate laws were also on my side.
Real estate only ever goes up!
I was about to dive once more into that sea of madness.