[New Korean Dream⑧] Foreigners Also Hooked... Gangnam 3 Districts K-Real Estate Shopping

Along with the soaring Korean real estate market that has continued in recent years, the 'K-Real Estate Boom' among foreigners has also begun. Not only has the volume of foreign transactions and ownership area of buildings and land increased, but the number of 'foreign landlords' receiving jeonse and monthly rent from Koreans has surged. Experts say, "Considering Korea's economic growth prospects and international status, the investment value of Korean real estate is attractive to foreigners," adding, "Foreigners have already become major players in the real estate market." 'New Korean Dream'

◇Record High Number of Foreign Landlords... Focused on Gangnam 3 Districts= According to the Court Registry Information Plaza on the 4th, among lease contracts with confirmed dates obtained from registries and community centers, contracts where foreigners are landlords recorded 12,246 cases last year, a 46% (3,878 cases) increase compared to 8,368 cases in 2017. In 2019, it surpassed 10,000 cases, breaking records every year. The upward trend continues this year as well. As of May, lease contracts with foreign landlords totaled 2,363 cases, a 51.9% increase compared to the previous month (1,554 cases). The cumulative total from January to May this year is 8,048 cases, a sharp 70.5% rise compared to 4,719 cases during the same period last year.

In particular, foreign landlords are showing a strong presence in the Gangnam 3 districts. Over the past five years, the district with the most registered foreign landlords in Seoul was Gangnam-gu (485 cases), followed by Seocho-gu (458 cases), Mapo-gu (375 cases), and Songpa-gu (359 cases). Among the 25 autonomous districts, the Gangnam 3 districts (Gangnam, Seocho, Songpa) account for nearly 30% of the total.

Foreigners' purchases of land and buildings are also notable. According to the Korea Real Estate Board, foreign transactions of pure domestic land (land excluding cases where land and buildings were traded together) reached 6,583 parcels last year, the highest since related statistics began in 2006. The number of domestic building transactions by foreigners exceeded 20,000 for the first time in 2020 (21,048 cases) and remained above 20,000 last year with 21,033 cases for two consecutive years.

◇‘K-Real Estate’ as Promising as ‘K-Pop’= The Korean real estate market is considered attractive in the eyes of foreign investors. Notably, Korea has a relatively low housing cost burden compared to major overseas countries.

As of 2020, Korea's Schwabe coefficient (the ratio of housing expenses to household expenditure) was 18.7%, lower than the United States (31.1%), the United Kingdom (30.1%), Canada (26.2%), and France (22.5%). This indicates more room for housing cost increases. Junseok Ko, CEO of J-Edu Investment Advisory, explained, "Korean real estate prices have been somewhat undervalued relative to income levels and economic power," adding, "While income levels have risen, the supply of new construction has remained insufficient, creating an investment environment that foreign investors would find noteworthy."

◇"Without Us, There Is No K-Construction" Foreign Power Also Evident at Construction Sites= The influence and power of foreigners in the real estate industry are also evident at construction sites. Construction sites suffer from labor shortages due to the aging of domestic workers and their avoidance of high-intensity and high-risk tasks.

A representative of a specialized construction company said, "Foreign workers have become 'precious assets,' and some have even formed their own unions to raise their value or voice stronger demands." The Specialized Construction Association officially requested the government last month to "lift restrictions on foreign employment and amend the Foreign Employment Act to enhance the lawful utilization of foreign labor."