Foreign Investment in Seoul’s Rental Housing Market

Global real estate asset managers are increasingly targeting Seoul’s rental housing market, which is evolving due to pressures on the country's housing security and the rise of rental scams. The traditional "jeonse" system, which involves tenants providing a large refundable deposit instead of paying monthly rent, is being replaced by more familiar monthly rental agreements. According to data from the Ministry of Land, over 50% of rental transactions in Seoul in the past year were for monthly rentals, the highest percentage recorded since 2011.

This shift is driving up rent prices, attracting foreign investors. US-based real estate investment firm Hines, known for managing $93 billion across 30 countries, has expanded its portfolio in Seoul, including a purchase of a mixed-use property in the Sinchon area. Similarly, US investment bank Morgan Stanley partnered with local developer SK D&D to invest in a rental property in Geumcheon-gu, western Seoul.

The government has introduced measures to promote institutional investment in the rental market, such as allowing real estate investment trusts (REITs), developers, and insurers to manage rental homes with long-term leases. These initiatives aim to address the housing shortage and attract foreign capital to provide high-quality, community-centered living spaces in Seoul.

Market experts predict that with rent prices in Seoul still relatively lower than in other major cities, foreign investments will continue to flow into the market, spurred by rising demand for rental properties and the government's push for structural changes to improve housing security.