This year, the demand for foreign investment in Seoul's real estate has been concentrated in the 'Han River Belt.' Among foreigners, the Chinese, who have purchased the most real estate in Seoul, tend to buy residential areas such as Guro and Geumcheon districts.
On the 22nd, ChosunBiz analyzed the status of ownership transfer applications for real estate (buildings, land, and collective buildings) from January to July of this year by nationality. The results showed that among foreigners applying for ownership transfer for real estate in Seoul, the largest group was Chinese, with 549 applications. They were followed by Americans with 412 applications and Canadians with 122. The number of applications from overseas Koreans also reached 50.
The number of foreign real estate purchases in Seoul increased yearly, rising from 1,563 in 2022 to 1,669 in 2023 and to 2,097 in 2024.
◇U.S., Canada, and China invest in the Han River Belt... Americans dominate in Gangnam
The most popular area for foreigners in Seoul was Guro district, where the number of applications for ownership transfer was 111. It was followed by Yeongdeungpo (97 applications), Seocho (93 applications), Gangnam (86 applications), and Geumcheon (84 applications).
The popular areas among foreigners generally coincide with those where Chinese have purchased real estate. The areas heavily bought by Chinese include Guro (103 transactions), Geumcheon (75), and Yeongdeungpo (58).
Excluding areas with strong Chinese buying, the 'Han River Belt' has been significant for foreign transactions. This year, approximately 46% (609 transactions) of the total 1,323 foreign transactions were made in Gangnam's three districts and Yongsan, Gangdong, Dongjak, Yeongdeungpo, Seongdong, and Mapo. The number of foreign purchases in the Han River Belt regions was highest in Seocho (93 transactions), Gangnam (86), Mapo (70), Yongsan (66), Songpa (63), and Seongdong (56). Of the transactions made by Chinese, 31% occurred in the Han River Belt.
In particular, in the Han River Belt, especially in the land transaction approval areas of the three Gangnam districts and Yongsan, there has been strong buying activity from Americans. The total number of applications for ownership transfer in these areas was 308, with Americans accounting for 170 applications, or 55.2%. Canadians followed with 49 applications (15.9%) and Chinese with 36 applications (11.7%). In these areas, not only pure foreigners but also foreign residents with Korean ancestry reportedly make up a significant portion.
◇Designating land transaction approval areas: Will it curb 'wag the dog'?
The government noted that although foreigners do not make up a large share of overall real estate transactions, attention is being paid to reports of foreign transactions that are emerging around the Han River Belt. This year, the number of domestic real estate purchases (111,747 transactions) compared to foreign purchases is only about 1%.
However, the government has determined that a 'wag the dog' phenomenon is occurring in foreign home purchasing. 'Wag the dog' refers to a situation where the tail (the foreign purchasers) wags the dog (the domestic market), implying that some foreigners' high-priced apartment acquisitions can elevate the prices of surrounding apartments, potentially undermining the effectiveness of real estate policy.
According to the Ministry of Land, Infrastructure and Transport, a foreigner surnamed A purchased an apartment in Yongsan for 18 billion won with full deposits, marking a new record for reported prices. A foreigner surnamed B purchased an apartment in Seocho for 7.3 billion won in cash, pushing up the surrounding market prices. The government requires foreign nationals without residence or address in Korea to designate a managing agent when buying domestic dwellings. Last year, the number of designated managing agents was 295, accounting for about 4% of total transactions (7,296 transactions). These transactions are likely to be viewed as speculative purchases by non-resident foreigners.
To curb such speculative transactions, the government has designated land transaction approval areas across Seoul and some regions of the metropolitan area. Foreigners must obtain prior permission when purchasing real estate in these areas and are subject to a two-year residency requirement.
Kim Hyo-sun, a real estate expert at NH Nonghyup Bank, said, "While the proportion of foreign dwelling transactions is small, the impact of even one speculative transaction from an overseas resident can be enormous. Therefore, it is necessary to implement preventive measures in this regard. Especially in Gangnam, even a single high-priced transaction can significantly affect the market, and since the metropolitan area aims to suppress domestic speculative transactions, the same approach should apply to foreigners as well."