From the famous K-Pop boy band BTS to Netflix’s most watched show Squid Game and Oscar-winning Parasite, South Korea’s culture is conquering the world. And, I think it is one of the main reasons why the country’s name is being like oxygen –it’s everywhere. And, now real estate investors are also wondering if they should diversify their portfolio in South Korea.
If you are also wondering if buying property in South Korea is a good investment or not, let me tell you that it depends on your investment purpose. It will depend on how much money you want to make and how much profit you want to make over how much period of time. Some believe that, be it commercial or residential, anyone can buy properties in South Korea as long as they have the money. I can’t say for certain that this article will answer your question perfectly, but it might shed some light on why some people invest in the real estate market in South Korea and why some don’t.
Reasons Why It Is a Good Investment
Opportunities in Rural Areas
South Korea is a country that’s a little larger than the state of Indiana in the US and has a population of more than 50 million people – half of it which prefer to live in Seoul, making it one of the world’s most populated cities. And, nearly half of the area of the country (like around 60-65 %) is mountainous. So, much of the country’s rural territories and slightly hilly areas are devoted to agriculture. With the currently huge population shift, many urbanites are moving into these rural areas. So, if you can get your hands on a nice piece of land in a rural place, you might stand a chance to make a hefty profit down the road. And, don’t worry, unlike some other Asian countries, the Foreigner’s Land Acquisition Act, the Registration of Real Estate Act, and the Foreign Exchange Transactions Act of South Korea make it possible for foreigners to buy land in rural areas of the country.
South Korea’s Strong GDP Rate
An important factor that amateur investors fail to consider is a country’s GDP rate. In terms of real estate, the high returns over the past decades in Asian countries have stemmed from high-interest rates, long-term, persistent economic growth and obviously a strong GDP growth. The long-run link between strong GDP and real estate is the main driver of real estate investments and real estate capital returns.
You see, when a country’s GDP increases, the country would then require more commercial land to consume (for hotels, shopping malls, community spaces), more industrial land to produce, more residential space to live in (to accommodate the increasing population) and more infrastructure. So, in other words, it can be assumed that GDP can drive the demand and success of both residential and commercial real estate markets.
So, considering the robust Korean economy, it is easy to see that you will most probably benefit from an investment in the South Korean market. In fact, according to experts, the country’s GDP per capita is expected to surpass Japan’s by 2030. Isn’t this a clear sign that the country’s real estate market is going to benefit from this productivity gain?
Korean’s Good Attitudes
Living in South Korea as a foreigner has no complications. Unlike the common or rather biased perception, Korean people are very generous and hospitable. As a foreigner, you will never get a hostile or aggressive attitude from Koreans. And, there are not many social expectations placed on foreigners and honestly, this is kind of nice because you get to live in a different society with a light personal responsibility.
Reasons Why It Is Not a Good Investment
High Housing Prices
As I previously mentioned, half or maybe even more of South Korea’s area is mountainous and thus there are not many urban or well-developed places that can be lived in. This is the reason why housing is known to be very expensive in South Korea and which consequently discourages real estate investors.
South Korea’s “Deranged” Neighbor
If not for its exorbitant real estate standards, I guess the most obvious reason for not investing in South Korea is its crazy neighbor, North Korea. You’d never know when a war could break out between these two countries. It happened before and it could happen again.