Apartments and studio-apartment buildings seen from Namsan in Seoul. Yonhap News
Global institutional investors are taking a fresh look at South Korea’s rental housing market as jeonse — a lease system requiring a large lump-sum deposit instead of monthly rent — rapidly gives way to monthly rent. A market that long offered little in the way of steady rental income because of its deposit-based structure is now emerging as a profitable destination for overseas capital.
Seven of 10 Leases Now Monthly Rent; Korea Ranks 4th in Asia-Pacific Preference
Cushman & Wakefield ranked South Korea the fourth most preferred residential investment destination in the Asia-Pacific region in its 2026 APAC Residential Investor Survey, according to real estate investment industry sources on the 6th. The country trailed Australia and New Zealand, Japan and Singapore.
The survey covered institutional investors, fund managers and listed property companies across the region. Together they manage about 224,000 residential units. Some 85% of respondents said they plan to increase their allocation to the residential sector over the next five years. Capital expected to flow into Asia-Pacific residential markets during that period totals $33.2 billion, or about 45.8 trillion won.
One of the biggest shifts behind Korea’s rise as an investment destination is the rapid move from jeonse to monthly rent. When jeonse dominated, it was difficult for corporate landlords to build a business around owning homes and collecting rent each month. But as jeonse fraud and disputes over unreturned deposits spread, compounded by high interest rates, tenant demand has shifted toward monthly rent.
Monthly rent accounted for 68.3% of all residential lease transactions nationwide in the first seven months of this year, up 6.5 percentage points from a year earlier, according to the Ministry of Land, Infrastructure and Transport. In non-apartment housing such as low-rise multi-unit buildings and officetels — studio units used as either a home or an office — the share reached 80.4% nationwide. It was 78% in Seoul and 87.5% outside the capital region.
Rent of 1.13 Million Won a Month Is No Deterrent as Foreign Capital Chases Co-living
A photo to aid understanding of the article. Yonhap News
The growing number of single-person households and high housing costs are also drawing investor interest. About half of the country’s roughly 51.1 million people lived in the greater Seoul area as of May, with Seoul alone accounting for about 18% of the total, according to a 2026 Seoul rental housing market report released by JLL Korea in June. Single-person households make up about 41%.
The product drawing attention alongside these shifts is co-living, in which residents share spaces such as kitchens and lounges. Co-living ranked second among residential asset types preferred by Asia-Pacific investors in the Cushman & Wakefield survey. Seoul is emerging as a major co-living market as rising single-person households, an influx of foreign professionals and international students, and high housing costs converge.
Rents run higher than at conventional officetels. The median monthly rent for co-living units of 40 square meters or less in Seoul was about 1.13 million won as of May, roughly 1.4 times the 790,000 won for conventional officetels, according to JLL Korea. In return, operators offer shared lounges, amenities and community services to attract young adults and foreign residents.
Government policy is also supporting the expansion of corporate rental housing. A new long-term private rental housing program allows corporations that secure 100 or more units to lease them for at least 20 years, with tax benefits available for operators that meet requirements on minimum lease periods and rent levels.
Morgan Stanley and KKR Move In With Successive Officetel Deals
Overseas capital is already showing up in completed transactions. At least 17 major deals were struck in Korea’s rental housing and co-living market from 2024 through this year, according to JLL Korea. A common approach is to acquire downtown officetels or struggling tourist hotels and convert them into co-living facilities aimed at younger residents.
Morgan Stanley began with an officetel in Doksan-dong in Seoul’s Geumcheon District in 2024, then invested in officetels in Gil-dong in Gangdong District and Anam-dong in Seongbuk District. Canada Pension Plan Investment Board is pursuing a build-to-rent business with Mangrove, a domestic private rental operator.
Global private equity firm KKR bought a residence building in Yangpyeong-dong in Seoul’s Yeongdeungpo District and an officetel in Hwigyeong-dong in Dongdaemun District. M&G Real Estate invested in the Episode Conveni Sindang officetel together with D&D Property Solutions, a subsidiary of SK D&D.
What tenants experience as shrinking jeonse supply and heavier monthly rent burdens reads to global investors as an environment offering steady rental income each month. JLL Korea said the shift from jeonse to monthly rent, and from family households to single-person households, will continue to draw capital from institutional investors seeking stable rental returns.