Brandon Donnelly

Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.

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Tag: south korea

  • Seoul’s infamous modernist megastructure

    Seun Sangga is Seoul’s first mixed-use complex.

    Constructed between 1967 and 1972, the elaborate structure sits atop a strip of land measuring 50 m x 1.2 km, which had been flatted during the Second World War as a way to contain the spread of fire in the event of an air raid and to act as an evacuation corridor.

    It’s a modernist development that is very much of this period. It’s massive, complicated in section and, in many ways, completely disconnected from its surrounding urban context. Flanking the various buildings are elevated and covered walkways.

    So it is perhaps not surprising that this development has followed a similar fate to many others of this era. While it was initially viewed as being quite modern and desirable — it was one of the first buildings in Seoul to have elevators — Seun Sangga was quick to start showing signs of decline.

    In fact, by as early as the 1970s, the complex became known for its porn shops and a bunch of other informal economy-type activities.

    It’s an interesting, though familiar, story.

    If you’d like to learn more, I recommend you check out this episode of the Urbanist and this article from The Architectural Review. The photos in the article are good accompaniment to the audio-only Urbanist episode, so make sure you flip through them.

  • Building a home on a constrained site

    I’m so predictable. This is the kind of house that tends to grab my attention: modern design, relatively small footprint (~7.8m x 12.3m), narrow street (~4m), and panoramic views (of Seoul). But what does it take to actually build a house like this in an urban fabric as dense as Seoul’s?

    If you read TIUM Architect’s description (using Google Translate for those of us who don’t speak Korean), you’ll see that the house was built out of concrete and steel, but that concrete trucks couldn’t stage on the narrow and dead-end street.

    So what they ended up having to do was build a 100-meter concrete conveying pipe (~328 feet) and staging somewhere else. It was such a pain in the ass that they only wanted to do this for the foundations. The rest of the house was built out of steel. (I think because of the clear spans that they wanted.)

    Sometimes small infill projects aren’t as simple as they may seem. In this case, the lot size is 92 m2. The building footprint is 51.53 m2 (56% lot coverage). And the total floor area is 136.52 m2.

    Photo: Lee Hanul via ArchDaily

  • Leadership is a great burden

    I went to bed last night watching President Biden’s address to the Canadian Parliament (full transcript, here.). And I woke up this morning to this Globe and Mail article about Canadian competitiveness. In it, Tony Keller talks about some of the things that are broken in this country (shockingly housing comes up), and compares Canada to Argentina (an example of too many bad decisions) and to South Korea (an example of many good decisions).

    All of this got me thinking about leadership.

    Leadership is a great burden. As a leader, people are looking to you for decisions, for direction, and for you to instil confidence. They are also scrutinizing your every word and action. And in today’s world, they are waiting to criticize you on social media and/or make a funny meme out of your most recent misspeak. As a developer, I get to interface with municipal politicians probably more than your average person, and I can tell you with confidence that it is a thankless job I would never want.

    I can only imagine having to constantly worry about your employment and what people are thinking. Given this incentive structure, I’m sure we’d all act accordingly. It is truly public, service. At the same time, I know that it is not only unproductive — but dangerous — to pander to just what is thought to be politically popular. And we have spoken many times before on this blog about housing and land use policies that may be popular, but aren’t at all effective — or worse, are counterproductive.

    What we should be demanding from our leaders are difficult decisions. These are the decisions that probably feel uncomfortable and that may require some personal sacrifice, but that are ultimately the right decisions for our collective long-term prosperity. It is about ambitiously deciding where we want to go and who we want to become, and then taking meaningful actions, however unpopular they may be, to get there.

    Don’t just tell me what I want to hear. Lead me. Push me. Be bold. In the end, we will respect you for your personal sacrifices and the difficult decisions you are making on our behalf. This is the great burden — but also the great opportunity — of leadership, and it behooves us to empower it. To borrow from Tony Keller, “there’s no reason we [Canada] can’t be the most prosperous and successful society on earth.”

  • Seoul crush

    We have spoken a lot over the years about the benefits of narrow and pedestrian-focused streets. Most recently, I even ran around Europe with a laser distance measuring device to collect a few field samples. Here’s an example from Marseille and here’s an example from Sicily.

    But given all this, I think it is important to recognize that what happened in Seoul over the weekend — a deadly crowd crush that killed over 150 people — is both a horrible tragedy and a result of too many people in a narrow and pedestrian-focused street. So clearly there can be a flip side to what we talk about here. At the time of writing this post, investigations were still ongoing.

    I am not a crowd-control expert, but I have spent time in dense Asian cities during major events and holidays, and never have I felt so claustrophobic. I have lined up for hours to get into subway stations and I have lined up to get into entire city districts — presumably because they were trying to avoid things like what happened this past weekend.

    My heart goes out to all of the people and families that were impacted by this horrific incident.

    🇰🇷 🇨🇦

  • How Toronto landed its first Michelin Guide

    Back in May, I happen to come across a 1912 copy of Michelin’s Guide to France. It was exceedingly cool to see and I’d love to find a copy for my own library. (For those of you looking for a reminder on how the Michelin Guide works, click here.)

    After returning to Toronto, I then serendipitously learned that our city would be getting its own guidebook this fall, which will be a first for both Toronto and for Canada as a whole. A Michelin-starred restaurant means something to some people, and has generally been proven to drive tourism dollars — so this is perhaps a big deal.

    But there’s a lot of opacity around how these guides work and how a restaurant gets awarded one, two, or three stars. Who are these secretive reviewers? And is it really worth the money that governments need to pay to the French tire company? South Korea allegedly spent US$1.8 million back in 2016 to get its guide.

    Andrew Weir, who is the executive vice president of Toronto’s tourism marketing group, was recently interviewed about all of the behind-the-scene efforts that took place in order to make this upcoming guide happen. If you’d like to have a read, click here.

    In my view, all of this is very much an act of city building.

  • South Korea’s idiosyncratic and counterintuitive home rental system

    Over the weekend I learned about a unique feature of South Korea’s housing market. It’s called jeonse. And the way this housing contract works is that, instead of tenants paying a monthly rent to their landlord, they pay a huge lump-sum amount up front. Usually this “key money” is equal to somewhere around 50% of the value of the home, but oftentimes it’s even higher (60-90% range). In 2014, the average cost of a jeonse deposit in Seoul was somewhere around US$300,000.

    In exchange for this huge lump-sum amount, jeonse tenants are able to live in the property for a period of time (usually 24 months) without having to pay any rent. Because what they are actually doing is paying via the opportunity cost of having their money tied up during their occupancy. Jeonse landlords are free to invest these lump-sum deposits however they see fit. The money they make from investing is their “rent” on the property. (The deposits are secured through a lien on the home, but of course that isn’t without some risk.)

    At first glance, this seems entirely counterintuitive. If you have hundreds of thousands of dollars available to you, why not buy? Why hand it over to a landlord so that they can go invest in things? Well, usually when there’s a marketplace for something it is because both sides stand to benefit. And in this case, the jeonse system supposedly emerged as the country was developing and people were rapidly urbanizing. Credit wasn’t widely available and so the jeonse system grew to help both tenants and landlords.

    For tenants, it was cheaper than owning a place outright and the “rent-free” period allowed them to more easily save up so that they could eventually buy. And for landlords, it was access to low-cost capital and the opportunity to invest in other money-making stuff. Some even credit the jeonse system with being instrumental in South Korea’s rapid rise in the second half of the 20th century.

    But is it still relevant today? Good question.

    The data suggests that it could very well be on the way out. Jeonse deposits have been declining for years and, based on this, it was overtaken in 2012 with more people choosing to pay rent on a monthly basis. As of 2019, it had grown to over 60% of tenancies in Seoul. And so it feels like the end could be near. But if any of you have first-hand experience with renting in South Korea, I would love to hear from you in the comment section below.

    Photo by Cait Ellis on Unsplash

  • An international travel boom is coming

    I was reading up on vaccine passports this morning. What is clear is that countries are scrambling to figure this out right now, though I understand Israel is already up and running, as is South Korea, which has a system built on top of the blockchain. (This feels like a great use case for the technology.)

    What is also clear (see above charts) is that many countries are highly motivated to figure this out sooner rather than later. The geographies that are weighted toward tourism dollars don’t want to miss out on yet another summer travel season. And given how dominant Europe is in terms of international arrivals, I suspect that they might end up leading the way in terms of rolling out some form of internationally accepted passport system. I would imagine that true universality is going to be a challenge though.

    Domestic travel in the US has already bounced back in a significant way. Looking at TSA screenings for the first half of this month (May 2021), travel right now is at about 70% of 2019 volumes. This is in comparison to just under 10% last year (May 2020). Once international travel gets streamlined in the second half of this year, I’m sure the same thing will happen on that front.

    One of my predictions at the beginning of this year was that we would see an explosion in global travel, probably in the second half of the year. I stand by that view. Many/most of us have spent the last year in various forms of lockdown and many/most of us have spent the last year with almost no work-life balance (a symptom of WFH).

    According to some recent data from home website Zillow, the company saw traffic skyrocket in 2020 from 1.5 billion visits to 9.6 billion visits (compared to the year prior). This is people looking at homes, and, in many cases, looking at homes that are more expensive than what they currently own. Real estate websites, you could argue, became a form of escapism last year, which is something that travel is normally pretty good at.

    People are restless and ready to unplug. I reckon that’s going to happen in a meaningful way later this year.

    Charts: Financial Times

  • Making giant ships

    This is an interesting New York Times photo essay about “how giant ships are built.” I wasn’t aware of some of these statistics, and maybe the same goes for you:

    • 90% of all traded goods are carried on ships
    • 90% of global shipbuilding happens in just three countries: China, South Korea, and Japan
    • There are 124 remaining and active shipyards in the United States, all supported by federal government contracts and the Jones Act, which requires that people and goods moving between American ports is done on ships that are owned/operated by US citizens and that were built domestically
    • US shipyards are believed to contribute about $37 billion in annual economic output and to support about 400,000 jobs
    • 88% of all food in the state of Hawaii is shipped in by boat — it is disproportionately reliant on trade (makes sense)

  • What’s next for cities? Probably more of the same.

    I am surprised, although maybe I shouldn’t be, by how quickly many seem to be allegedly turning their back on cities. According to the New York Times, cities were “losing their allure” well before this pandemic, and this might just be the tipping point. The underlying argument: Density is bad. We should probably all move somewhere bucolic, where the cost of housing is less and work isn’t so stressful. Zoom only when necessary.

    But as the chief economist for Indeed, Jed Kolko, rightly points out in the article, how people behave (and think) during a global pandemic is probably not a great indicator for how they will want to live their lives when this is all over. It’s also not clear that urban density is really the contributor of spread. Hyper-dense cities such as Seoul and Hong Kong have been performing relatively well. (Joe Cortright has some thoughts on this.)

    Once we get to the other side, we will see the data and we will get a better understanding of this current situation. And then in hindsight, we will find ways to rationalize the outcomes to ourselves. In the interim, I’m not about to bet against cities. Here’s how Paul Romer, professor at New York University, put it in this recent interview in City Journal:

    “I think the underlying economic reality is that there is tremendous economic value in interacting with people and sharing ideas. There’s still a lot to be gained from interaction in close physical proximity because such interaction is a large part of how we establish trust. So I think that, for the rest of my life, cities are going to continue to be where the action is.”

    Photo by bady qb on Unsplash

  • Leveraging mobile phone data during a pandemic

    Smartphone user data is hugely valuable at a time like this. Which is why governments all over the world from Israel to South Korea are using aggregated telecom data to try and track how their citizens are moving during this pandemic.

    Some are calling this a violation of digital rights. I don’t know enough to comment on that specifically, but I do know that the value to society as a whole is clear. It strikes me that if we knew (1) who was infected (you know this by doing widespread testing), (2) where people have been, and (3) where people are today, we would be in a much better position to contain the spread.

    To that end, Singapore’s Ministry of Health has been publicizing a surprising amount of information regarding its cases. And that data has been in turn made into interactive maps. You can see who is infected, where they live and work, which hospital they were admitted to, and so on. Is this an overshare? Or is this price of collective health and security?

    The New York Times has similarly gone and visualized the movement of people and the virus using data from major telecoms, Baidu, and other sources; though in this case it is more of a retrospective view of what went wrong as opposed to a proactive management tool. The argument they make is that Wuhan’s lockdown was too little, too late.

    According to the NY Times, 175,000 people left Wuhan on January 1st alone. Throughout the month of January, outbound travel from Wuhan accelerated as many started to fear a lockdown. About 7 million people left in January. Where they travelled to can be found here. Would it be too draconian to use this kind of mobile phone data to see who is obeying a lockdown and who is not?

    Images: New York Times