Recently, as the trend of converting to monthly rent accelerates, foreign capital is rapidly flowing into the domestic rental housing market. Investment banks, pension funds, and real estate companies, regarded as 'global big hands,' are actively establishing joint ventures with Korean corporations that are well-acquainted with the domestic housing market to enter the corporate rental housing business. This is due to the rapid increase in monthly rent demand, particularly among the younger demographic, following the jeonse fraud incident, which has expanded the scalability of the corporate rental market. The government is also actively promoting policies for corporations' entry into the rental housing market to expand housing supply, so the influx of foreign big hands aiming for the corporate rental housing market is expected to continue for the time being.
According to related industries on the 14th, foreign financial investment firms are increasingly focusing on the domestic rental market and entering it. Last month, the Canada Pension Plan Investment Board (CPP Investments) established a joint venture (JV) with real estate impact developer MGRV for a rental housing project development. This JV plans to invest up to 133 billion won to develop rental housing near major business districts and universities in Seoul.
In November of last year, Morgan Stanley purchased the Seoul Gangdong-gu Gildong studio-type rental housing 'Jiwell Homes Life Gangdong' for 13.3 billion won and remodeled it into a rental housing unit in collaboration with the rental housing operator SL Corporation (SLP). U.S. private equity firm KKR also established a joint venture with the Hong Kong-based co-living company 'WeLive' earlier this year and introduced 'The State Sunyu Hotel' in Yangpyeong-dong, Yeongdeungpo-gu, as a premium residence.
The appearance of foreign capital in the domestic rental market is attributed to the acceleration of the trend towards monthly rents in the housing market. Following the jeonse fraud incident that erupted in 2022, the proportion of monthly rents in the housing rental market is increasing rapidly. According to the Supreme Court's registry information platform, among the 2,476,870 housing rental contracts nationwide with certified dates last year, 1,428,950 were monthly rent contracts, accounting for 57.7% of all contracts. This is the highest figure since the compilation of certified date information began in 2014.
The overall reduction in the aversion to monthly rent in society, coupled with the increasing number of young people preferring rental over home purchases, is another reason for the expected rise in the proportion of monthly rents in the housing rental market. According to the report '2025 Housing Market Outlook and Policy Directions' by the Korea Institute of Housing Industry, the annual average number of individuals reaching the age of 30 from 2018 to 2021 was around 673,000, but this is expected to increase to around 750,000 after 2023, leading to an increase in monthly rent demand.
An industry insider commented, "Until now, South Korea has been a market where corporate rental housing was difficult to develop due to the unique jeonse system, which does not exist anywhere else in the world," and noted, "However, following the jeonse fraud incident, there has been a phenomenon of tenants avoiding the high deposits of jeonse and preferring monthly rent, indicating that opportunities for corporate rental housing are emerging in Korea from abroad."
In particular, as the government is trying to expand the corporate rental housing market as part of housing supply measures, the inflow of foreign capital into the domestic real estate market is expected to accelerate further. To promote the activation of corporate rental housing last year, the government announced a plan for 'corporate long-term rental housing' that would allow real estate investment companies (REITs), construction firms, and insurance companies to operate rental houses for more than 20 years. This plan would liberalize rent regulations and provide tax benefits if corporations participate in large-scale long-term rental businesses. The goal is to supply more than 100,000 corporate rental housing units by 2035.
The private rental housing law containing this information is scheduled to be discussed in the National Assembly at the end of this month. Minister of Land, Infrastructure and Transport Park Sang-woo stated on the 11th, "Important livelihood bills, including the private rental housing law for introducing new types of long-term rentals, are still pending in the National Assembly," and added, "I will do my best to ensure that the major bills are processed in the February session of the National Assembly."
In the real estate development market, it is expected that if this bill passes the National Assembly, the entry of foreign capital into the domestic rental housing market will accelerate further. There are projections that there will still be many cases of establishing joint ventures with domestic companies due to the differences between the domestic rental market and those in other countries where monthly rents have already been established. An industry related person mentioned, "The corporate rental housing market requires expertise and capabilities not only in finance but also in actual housing development and operations," and added, "For foreign entities that are not well-informed about the domestic rental market, interest in domestic companies that integrate development and operation will inevitably increase."
As the number of corporate rental housing units based on foreign capital increases, there is an expectation that the stabilization of the housing rental market, which had previously depended on individuals, will become possible. There is also the advantage that the standard of living through the enlargement of rental housing will improve. However, because the primary purpose of corporate rental housing is 'revenue,' there is a possibility that rents may rise as a side effect.