Compared to neighboring Japan, anyone investing in South Korean property has seen a significantly better performance over the past few decades.
South Korea is located in a triangle of the Yellow Sea, the East China Sea, and the Sea of Japan. Due to its geographical positioning between Japan and China, it was often caught in the unenviable crossfires of the two countries’ power struggles.
The twentieth century was no different, yet contrary to all expectations, it was during this time when South Korea became a power unto itself.
The United States, partially in a bid to build allies to fight communism, provided foreign aid and training to promote the development of infrastructure in the country.
In exchange, South Korea contributed manpower for the Vietnam war. This quid pro quo laid ground for extraordinary economic development. With such foreign investment and capital inflow, South Korea was able to fund schools, factories, roads, ports, etc.
Over half a century later, we can see the results. Within a single lifetime, the country went from a substandard, mostly agrarian, economy to one of the leading industrialized countries the world over.
Korea escaped the middle-income trap around the time of the new millennium to join Singapore and Japan as one of the Asia-Pacific region’s most developed nations.
Few countries have performed better than South Korea over the past decades. This trend is also likely to continue as its growing population, competent governance, and rising income are all great indicators of societal health and potential.
In the 1990s it would have been difficult to name a single Korean brand. Today, though, I’m willing to bet that you are less than 30 feet away from a Korean product.
Whether it’s an LG or Samsung appliance or a Kia or Hyundai vehicle, it serves to illustrate just how widespread their goods are.
The country’s considerable soft power is underappreciated as well. For example, the top YouTube video ever, Gangnam Style, was a K-pop song by South Korean singer Psy.
In addition, there’s a growing film industry that is hitting the mainstream, and you’ve likely even seen some of them, like Parasite, Train to Busan, etc. to name a few.
Suffice it to say, while its influence on the wide world is understated, it’s considerably more than one might expect for a country which only came into existence in its modern form in 1948!
For completionism’s sake, we’ll also mention that South Korea scores strongly on practically every type of global business ranking, including The World Bank’s Ease of Doing Business Index which ranks them fifth in the world, but this is something you could have very easily guessed.
South Korea is among the most dynamic economies of the last few decades and is a model which developing economies should follow.
In this guide, we will discuss real estate investment in Korea, its practical considerations, and where the best property investment opportunities can be found.
Can Foreigners Invest in Korea Property?
Property ownership, and specifically the regulations surrounding it, is one of those topics which tends to be a telltale sign of the underlying legal and philosophical doctrines at work within a country.
To paint a picture in very broad strokes, property rights in Asia tend to be limited. When you buy a property, you might be buying the structure and leasing the land underneath for several decades. Or you might not own anything at all with merely a long-term lease.
In some countries, like the Philippines and Thailand, you are allowed foreign ownership of condo units but you cannot own the land underneath. Each country has its own particular legal framework and there are bound to be local complications regarding property ownership.
This applies doubly when you’re a foreigner. More often than not, expats are barred from owning property outright. But there are typically ways around it, such as creating local legal entities you control, which buy the property for you, or you can partner with a local, and so on.
But if you’re investing in South Korea, you won’t face any restrictions as a non-local property buyer.
South Korea is one of the rare places in Asia where foreigners can own land under their own name. The only other places where you can directly buy land are Malaysia and Japan.
This, by itself, is already a fantastic boon, when compared to most Asian countries. The longstanding respect for property rights and a clear legal framework should perk up any international investor’s ears.
How Much Are South Korean Property Taxes?
Property taxes in South Korea are minimal compared to Western standards.
Nevertheless, they aren’t the lowest rates in the region – this honor goes to Thailand and Cambodia, which don’t have any real estate taxes at all. However, despite a recent increase, South Korea’s property taxes remain the lowest in developed Asia.
Owners fall into one of four different tax brackets corresponding to the government appraised value of their property. Taxpayers owe a fixed rate annually depending on their home’s value.
Places to Invest in South Korea
Despite being noticeably smaller than the neighboring countries of Japan and China, South Korea is a remarkably variable country. It has beaches, mountains, forests and many large metropolitan areas with thousands of years of history.
Seoul, the capital city, is the fifth-largest urban area on Earth with a population of over 25 million people. It has so many distinct areas by itself that I could easily write an entire guide just about buying real estate in Seoul.
However, the most obvious region to buy real estate in should not detract from looking at other regions as well. Depending on what you’re after, second-tier cities might even be better places to purchase property than in the capital.
In addition to Seoul, there is also Busan, Daejeon, and Daegu, which are fast-growing cities in their own right. Each of these cities have several million inhabitants, giving you plenty of options in general if you’re investing in Korea.
Besides that, there is Jeju Island, which is Korea’s version of Hawaii or Phuket. It is not only beautiful but there are also special incentives to invest here, which we’ll discuss in more depth in the coming sections.
At the beginning of each entry, I will be providing a small summary of the demographics and the GDP of each section.
I will also be including a measure you might not have seen elsewhere, which is the baseline difference metric; this is a percentage difference between South Korea’s GDP per capita of $31,846.22 and the regional one.
In effect, what this metric seeks to capture is the difference in regional financial development.
As given the variance in GDP per capita, you’re implicitly capturing individual purchasing power, which is a good shorthand way of understanding the relative complexity of an economy.
The higher it is from the average, the more likely it is that an area has a thriving economy or is overvalued. Conversely, the lower it is from the average, the more likely it is that it has plenty of development room or is an economically depressed area.
It’s meant as a guideline, rather than a hard rule, but it should work as a good rule of thumb of what the likeliest challenges and opportunities in a given region might be.
With that in mind, we will be discussing each region in more detail.
Population : 9.776m
GDP : $408,265m
GDP per capita: $41,944
Regional Baseline Difference: 31.71%
Approximate Price per Square Meter to Buy Apartment in City Centre: $19,110.86
Seoul – located in the Northern part of the country and divided in two by the Han River – is the capital city of South Korea. Its urban footprint is among the largest in the world and is also one of East Asia’s most important financial and cultural centers.
The city offers an interesting mixture of old alongside the cutting-edge in technology, city planning and culture. Ancient Buddhist temples can be found close to nightlife districts – it is a city that relishes the incongruity between what Korea was and what it aspires to be.
Seoul is divided into 25 districts, each of which is comparable in size to cities. And it lends itself to this notion, as each district has its own feel.
But broadly speaking, one can say that Gangbuk, the Northern area of the city is the historical portion; while the South, which is known as Gangnam, is the more modern and wealthier portion.
Population : 2.955m
GDP : $92,453m
GDP per capita: $31,286
Regional Baseline Difference: -1.75%
Approximate Price per Square Meter to Buy Apartment in City Centre: $10,560.00
Incheon is a transportation hub by air and sea, given that it has a massive harbor and the Seoul metro area’s main international airport.
The city houses various noteworthy engineering projects. One such project is the 151 Incheon Tower, two 151m tall twin towers connected by three bridges and a common area at the bottom.
The Songdo International Business district, a new master-planned city, is under construction on reclaimed land off Incheon’s eastern part. It’s slated for completion in the coming years.
Songdo stands as a testament to the economic ambitions of Incheon, given that the 6km squared area will host dozens of massive skyscrapers and complexes, each planned with unique characteristics.
Population : 3.411m
GDP : $92,838m
GDP per capita: $27,211
Regional Baseline Difference: -14.56%
Approximate Price per Square Meter to Buy Apartment in City Centre: $4,840.00
Busan’s primary attractions are its beaches and seafood market.
It has a more relaxed way of doing things than Seoul and also possesses a more international flair as travelers from around the world disembark in the ports, which are the biggest in the country.
Despite Busan’s location at the farthest point from the capital, it is well connected by rail via the KTX transport network, and the city serves as a local hub for the rail system.
Population : 2.468m
GDP : $56,793m
GDP per capita: $23,010
Regional Baseline Difference: -27.75%
Approximate Price per Square Meter to Buy Apartment in City Centre: $5,426.67
Located in the middle of a valley in the Eastern portion of the nation, Daegu is the fourth largest city in South Korea.
The city takes advantage of its flat terrain, and its subway draws an X shape across it, along with a horizontal line intersecting the North and the South, thus it ensures easy transport across the urban area.
The city is home to 3 US bases – Camp Henry, Camp George (which houses the Daegu American School), and Camp Walker. Hence, the city is home to hundreds of US citizens.
That said, Daegu is primarily a homogeneous Korean town that lacks the international flair of Seoul, or even Busan.
Part of this tradition is what lends itself to the stereotype that other Koreans have about Daeguan people, wherein they are viewed as conservative, modest, and hard-working.
It’s worth highlighting that this city, in terms of regional baseline difference, is the lowest one under our consideration, as it has a -27.75% difference from the national GDP per capita average.
Consequently, one might benefit from giving the economy a look. Primarily, Daegu is a manufacturing city, wherein major participating industries are textiles, metals and machinery. Major companies, like Daegu Bank, Korea Delphi and Hwasung corp are situated here as well.
It used to be the third most productive city in Korea. In 2006, it accounted for as much as 94% of Korea’s trade surplus.
That said, Daegu’s textile industry which is the sector driving the economy, has recently declined and thus the overall economic growth of the city has also fallen.
Buying property in Daegu means investing in Korea’s manufacturing industry.
Population : 1.508m
GDP : $41,072m
GDP per capita: $27,233
Regional Baseline Difference: -14.49%
Approximate Price per Square Meter to Buy Apartment in City Centre: $2,970
Because of this, Seoul can be reached by rail in under an hour.
Informally, it is known as the Silicon Valley of Korea, as it boasts over 200 research institutions and dozens of universities. Besides that, many of the well-known Korean startups spun off in this city.
The brightest minds in the country are often to be found here before they’re whisked away to work in the capital. Generally speaking, it’s a city that facilitates researchers in all manner of fields to network with each other.
Population : 695,519
GDP : $19,335m
GDP per capita: $27,799
Regional Baseline Difference: -12.71%
Approximate Price per Square Meter to Buy Apartment in City Centre: $7,543.41
Partially to blame for this is the fact that the island is a special economic zone that has various incentives for people to go and spend their money there both in the short to long term.
For starters, Korea offers visa-free travel to the island specifically. Meaning that Indian and Chinese visitors, who wouldn’t otherwise be allowed in Korea without a visa, are welcomed with open arms there.
In addition, there are longer-term real estate investment programs that allow you to purchase real estate worth 500m South Korean won (c.$443,174) to qualify for a visa, which can be converted into a long term residency after five years.
In either case, it is a beautiful island with beaches, hiking trails, and great food, all in the backdrop of the native Jeju culture.
Korean Investment Visa, Residency, and Citizenship
There are various ways in which you can get a residence permit when buying property South Korea. Here are a few of the available options:
- F-2 Visa – qualifying for this visa depends on the result of a questionnaire, wherein each question is weighted with a particular value. If the end result is superior to 80 points, you qualify for the program. However, many of the requirements rely on having ties to Korea, so you’re unlikely to meet them if you are coming as an expat.
- Immigrant Investor – This is a fairly straightforward residence permit. You need a liquid net worth of 300m South Korean won (c.$265,904) to qualify.
- Jeju Island Real Estate Investor – To qualify, you need to buy real estate worth 500m South Korean won (c.$443,174). The visa can be converted into long term residency after five years.
Each of these options has particular advantages and drawbacks and deserve their own more specific attention. But there are plenty of available options, the one major requirement being that you need to have a considerably higher than average net worth.
In exchange, South Korea is one of few countries in Asia which will let you become a citizen. It’s possible to get a passport if you’re a long-term resident.
It’s also worth mentioning that, contrary to the normal state of affairs in Asia, they allow dual nationality, so you don’t have to give up your current citizenship.
Is Property in Korea a Good Investment?
South Korea boasts something few other developed Asian markets can: excellent demographics.
Neighboring Japan now suffers a rapid population decline along with an ageing workforce. Meanwhile, China’s population will begin shrinking by around the year 2030 and will almost surely have a similar fate.
Japan had its day in the 80s when commenters were arguing that it was bound to take over the world. Then, it settled down to a more reasonable level as its demographics passed their zenith.
China is currently undergoing such a transformation. Most mainstream commenters foresee its total dominance over the next century, but eventually, it will not be able to escape its demographics.
How does this apply to investing in South Korea? That means its soft power will remain understated.
That said, Korea is expected to grow during the 21st century. Over the very long-term, its population of 51 million currently could even exceed Japan’s, provided that several factors align.
In real estate investment circles, there’s a truism which is usually attributed to Mark Twain “Buy land, they’re not making it anymore.”
It stands to reason that because it is a scarce asset, it will only appreciate. The thing that is usually taken for granted in this assessment is that demand will increase as well.
Barring some fundamental change in people’s view on property, the main way by which this change in demand can happen is when there are more people in a society.
As such, given the increased population rates, it’s a reasonable assumption to say that property values in Korea should continue rising for decades to come.
Among industrialized first-world nations, South Korea is a country often flying under the radar. Its achievements and influence, despite being vast, are understated and might require some deliberation before they’re recalled.
This is a state of affairs that suits the nation well, given that it has historically been coveted by major powers.
Hence, in this way it can benefit from the best of both worlds – develop economically and have first-class living standards, while avoiding the power jockeying often required to maintain such privileges.
Yet, unlike some of its peers at the top of the league tables, South Korea is not a weary country. Other first world countries have a sense of world-weariness – their economies are stagnant and their birth rates are declining.
Investing in South Korea is the polar opposite. The nation’s demographics are superb and some of the most important technology companies in the world do business there.
In deciding what to invest in, the most egregious mistake you can usually make is going where everyone else is. On the other hand, there can be a great risk in blindly going into the great unknown.
That is why there is value easily found while investing in South Korea. Though not wholly unknown, the country’s potential is underappreciated and understated.
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