Sunday, January 22, 2023

Homes For Sale In Korea

The Best Cities To Buy Property In Korea

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Korea has a population of around 52 million people and its predicted to increase. Yet, around half of the population lives in Seoul.

Lets have a look at the most interesting cities when investing in residential real estate in Korea.

Seoul

Prices have skyrocketed in Seoul recently and the government has imposed new taxes, trying to curb the escalating prices. Its not strange, as it serves as both the cultural, economical, and political center of the country.

Despite seeing prices going through the roof, locals and foreigners alike continue to invest in Seoul real estate.

The city is divided into 25 districts and one can say that Gangbuk, the Northern part, is the historical area. The Southern part, on the other hand, is called Gangnam with a more modern and premium appeal.

Busan

Busan is smaller than Seoul but has seen a big influx of Japanese and Chinese investors in the past years.

Properties can be bought for a fraction compared to Seoul and places like Hong Kong, Singapore, and Shanghai. At the same time, you can enjoy the great local culture and weather.

Busan is also a major city that hosts many good universities if you plan to send your children abroad.

Being the second-biggest city, it has a more relaxed feeling and is mainly known for having the biggest port in Korea, the Port of Busan. It was established in 1876 and is the fifth busiest port in the world.

Jeju Island

Asian investors, many from China, have poured into Jeju Island in the past years.

Daegu

Incheon

Property Prices In Korea

Despite suffering from the ongoing pandemic, resulting in closed borders and significantly reduced commercial activity in 2020, Korea saw the fastest-growing real estate prices in 9 years during the year.

In 2011, housing prices increased by 6.14%, while we saw an average increase of 5.36% in 2020.

In late 2018, the average house price in Seoul was more than 700 million Wong . In areas like Gangnam, prices have reached well above USD 700,000 on average.

Naturally, this has left the government with no other choice than to increase taxes and introduce so-called non-speculation zones.

If you look for cheaper property, Busan should be of interest and where real estate prices arent even half as high as in Seoul.

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DISCLAIMER: The currency conversion is provided for illustration purposes only. It is meant only as an approximation based on the latest information available and should not be relied upon for any other purposes. We are not responsible for any loss that you may incur as a result of relying on these currency conversions. All property prices are as stated by the listing agent.

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Can Foreigners Buy Property In Korea

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Korea is one of a few Asian countries where you can buy residential and commercial property without restrictions as a foreigner. You are treated on a similar level as locals, something thats rare for Asian countries.

Japan is most likely the only country in Asia that treats foreign investors in a similar way. A handful of acts have been issued in Korea though and there are some regulations you should beware of.

This is especially the case if youre a non-resident without previous experience in the country.

The acts are:

  • The Foreigners Land Acquisition Act
  • The Registration of Real Estate Act
  • The Foreign Exchange Transactions Act

Lets have a look at each act to understand what they mean practically.

The Foreigners Land Acquisition Act

The Foreigners Land Acquisition Act explains that when you enter into a Sales Contract with a seller, you need to inform the head of the government within 60 days from the issue date of the contract.

Besides, you should seek approval for purchases of land located in protected areas, for example:

  • The military operates
  • There are cultural properties with heritage value
  • Conservation areas that protect nature and ecosystems

In case you dont apply for a permit if youre obliged to do so, you will either be fined and can face imprisonment.

The Registration of Real Estate Act

This act simply explains the correct procedure when registering a property. It applies to both Korean nationals, foreign residents, and non-residents.

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Can I Get A Residence Permit If I Buy Property In Korea

Youll not get residency automatically by simply buying property.

However, the same as for Japan, youre able to apply for a residence permit through a so-called point system. And the grading is even similar to Japans.

Getting an F-2 Visa

To apply to become a long-term resident under the F-2 visa, you need to get at least 80 points in the point system.

So how does it work?

Here, they mainly look at your age, Korean language proficiency, income, and professional experience. In short, if you want to rank high in the F-2 point system, you should be 30-34 years old, have a Ph.D. in engineering, and fluent in Korean.

If you have a good income and professional experience from Korea on top of that, youre good to go as well.

You also get extra points if you have paid taxes in Korea , studied in Korea, have professional experience from abroad, or have done volunteer activities in Korea.

Can Foreigners Buy Real Property In Korea Korean Real Estate Law For Non

Unlike some Asian countries that do not allow or strictly limit foreign ownership of real properties, South Korea has a buoyant market that permits foreigners to purchase real estate and even land in Korea. The major restrictions on ownership of real estate for non-Koreans was lifted during the 1997 Asian Financial Crisis based on the advice of the IMF. The lifting of these restrictions, led, in part, to a commercial and residential real estate boom. The major benefit to Korea was in the high-end commercial and high-end residential real estate space.

While the majority of the restrictions were lifted by the Korean government, foreign buyers of real property are required to follow specific legal requirements provided under the Korean law that are not, in most cases, required of Koreans. For an explanation of some of the remaining restrictions of the purchase of real property by non-Korean please see: Restrictions on Foreigners Purchasing Property in Korea.

The requirements are divided, in short, into two categories: the first one are requirements for foreign buyers of real estate who are residents of South Korea and the second are requirements for foreign buyers who are not residents of the country. If you are interested in understanding Korean acquisition taxes, please see: Korean Real Estate Acquisition Taxes for Expat Buyers of Real Estate.

You may schedule an initial free consultation with a Korean lawyer at: Schedule a Call with an Attorney in Korea.

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Korean Real Estate Agents

There are many international real estate agents operating in Korea, ready to serve both locals and foreigners.

Some of the biggest are:

  • CBRE Korea
  • Cushman & Wakefield Korea
  • RE/MAX Korea

If youre living in Mainland China, Hong Kong, Singapore or any nearby countries, you can also make a short trip to Korea and scout on-site, enjoying being there as a tourist.

Real Estate Agent Commissions

If you use a Real estate agent when buying the property, you usually pay a fee of 0.2% to 0.9%. This is lower compared to many other countries but also related to property prices.

Jeonse vs. Wolse

Tenants rent property through the Jeonse or the Wolse system.

The Jeonse system is not known in other countries and means that you submit, lets say, a one-year total of rent to the landlord.

Later, you receive the money back. You can save money by avoiding paying rent for a year, but at the same time lose money due to the time value of money.

For example, the landlord can use your money for other investments, such as stocks, and receive profits bigger than the rental incomes otherwise received.

The Wolse system is the same as the common rental system we use in other countries. That means, you pay 1-3 months of rent in deposit, then you pay the rent on a monthly basis.

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Korea has experienced some of the most impressive growths in the past decades, which I personally believe deserves more attention.

From having a GDP per capita on par with the Philippines and Thailand in the 1970s, it has developed into becoming a leading manufacturer of everything from food products, cosmetics, cars, automotive parts, ships, and electronics.

This was primarily a result of US-backing, an export-oriented economy, and land reforms. Previously, companies were not granted loans from banks unless they met a certain quota of exports, for example.

While Koreas eCommerce market is one of the fastest-growing in the world, its manufacturing industry experiences great growth rapidly, and it will overtake Japan in GDP per capita by 2025.

Looking at its real estate market, foreigners predominantly buy real estate for personal reasons and yields are always not the most important. In this article, I explain how you can buy real estate in Korea, covering a wide range of topics.

Topics covered:

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Can Foreigners Get Property Loans In Korea

International banks like HSBC, Standard Chartered, Citibank, Agricultural Bank of China, and China Construction Bank all have offices in Korea.

You can also find local banks such as Shinhan Bank that has established a strong presence in Vietnam, due to the many Korean expats residing there.

With that said, its difficult for non-residents to apply for local property loans.

The same as for Japan, you usually need to reside in Korea, and preferably be a permanent resident. Having a Korean spouse might also help you.

Standard Chartered Korea is one bank that offers mortgages to foreigners that reside in Korea and that I recommend you to contact.

Process When Applying for Property Loans

If youre a foreign resident, you first need to provide a Certificate of Local Residency or a Certificate of Foreign National Registration, to prove your residency.

Other documents you need to provide are a Certificate of Employment, Certificate of Immigration, and Certificate of Business Registration.

Due to rapidly increasing property prices recently, especially in Seoul, the Korean Government has made it even more difficult for investors to get property loans.

Taxes such as the capital gains tax have been raised as well to cool down the market.

The easier option is to apply for a property loan in your home country. Just keep in mind that such loans are limited and usually dedicated to cities like London, Sydney, Tokyo, and New York.

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