• How to Buy Property in Korea: A Complete Guide

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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 Korea’s 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:

    Can foreigners buy property in Korea?

    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 that’s 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 you’re a non-resident without previous experience in the country.

    The acts are:

    • The Foreigner’s Land Acquisition Act
    • The Registration of Real Estate Act
    • The Foreign Exchange Transactions Act

    Let’s have a look at each act to understand what they mean practically.

    The Foreigner’s Land Acquisition Act

    The Foreigner’s 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 don’t apply for a permit if you’re obliged to do so, you will either be fined and can face imprisonment.

    buy-property-korea

    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.

    The act includes details regarding, for example:

    • Ownership of property
    • Your rights to let your property, and making a profit
    • Mortgages
    • Easement (a word for a person that rents land from a landowner for a limited time)

    The Foreign Exchange Transactions Act

    Only non-resident foreigners have to comply with this act.

    Simply put, it explains the guidelines and the importance of foreign transactions, such as keeping the Wong (official currency in Korea) and international payments on a “balanced” level.

    It also refers to transactions made between Korea and other countries, which is required if you are a non-resident buyer.

    For more information, I recommend that you visit the Korean Government’s website.

    You should also you ask your property lawyer or real estate agent to confirm whether the property needs any special approvals, considering to the above Acts.

    Can foreigners buy land in Korea?

    Yes! Foreigners generally don’t have any issues buying land, which is unique. This is a great benefit and not always the case in developing countries like Thailand.

    If you want to learn more about how it works when buying land in Korea, I recommend you to read my separate article.

    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, it’s 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 you’re 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.

    Property Taxes

    Before you engage in the Korean real estate market, you must understand your tax obligation when buying, holding, and selling units. Below I have listed the most important taxes when acquiring real estate.

    Stamp Duty

    The stamp duty ranges between KRW 50 – 350,000 (up to USD 320), depending on the value of the property.

    The stamp duty is low compared to other countries. In places like Hong Kong and Singapore, the rates are significantly higher.

    Instead, you also need to add an acquisition tax.

    Acquisition Tax

    The acquisition tax is currently set to 2% and paid when you buy the property.

    Property Tax

    The annual property tax for villas is 4%. For properties other than villas, the rate ranges between 0.15% to 0.50%, depending on the value of the property and its location.

    Rental Income Tax (withholding tax)

    The rental income tax is the same for non-residents and residents. The tax rate ranged between 6% to 40%, depending on the total amount of your rental income.

    From KRW 0 – 12,000,000 (around USD 0 – 10,000) the tax is 6%.

    Capital Gains Tax

    Same as for rental income tax, the capital gains tax ranges between 6% to 40%, depending on the property value.

    The background of this is that the rental income is seen as a capital gain made throughout the year.

    Can I get a residence permit if I buy property in Korea?

    You’ll not get residency automatically by simply buying property.

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

    Getting an F-2 Visa

    residence-permit-korea

    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, you’re good to go as well.

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

    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
    • Knight Frank Korea
    • Cushman & Wakefield Korea
    • RE/MAX Korea

    If you’re 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, let’s 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.

    The Best Cities to Buy Property in Korea

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

    Let’s 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. It’s 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 top tenth busiest port in the world.

    Jeju Island

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

    Here, foreign investors can receive residence permits if they invest at least KRW 500,000,000 (slightly less than USD 500,000) into local real estate. This will also grant them a permanent visa.

    Even if the Government has introduced restrictions due to the big influx of investors, it still remains one of the most popular options to buy real estate.

    Daegu

    The GDP per capita is almost half in Daegu compared to Seoul, it’s also significantly smaller with a population of around 2.5 million.

    The city is the fourth-biggest and situated in the Eastern parts, but with significantly less commercial activity compared to Seoul and Busan.

    Interestingly, Koreans have a stereotype about Daeguan people as they are seen as modest, conservative, and hard-working.

    The city is known for being a manufacturing city and experienced high productivity in the mid-2000s. Banks and foreign manufacturing companies, including Delphi, all operate from here.

    Incheon

    Incheon is the third-biggest city with a population of around 3 million people, located along the coast and West of Seoul.

    The city thus enjoys economic spillover from Seoul and connects the capital with the ocean. It’s perhaps most famous for the country’s biggest airport, Incheon Airport, currently ranked as the fourth-busiest in terms of cargo transports.

    The expansion of Incheon Port will further benefit the city’s economy and you can find many logistics- and other related companies here.

    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 (USD 577,000). 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 aren’t even half as high as in Seoul.

    Conclusion

    Korea has some of the most relaxed property ownership regulations in Asia and non-resident foreigners can own freehold land as well as commercial property without particular problems.

    Working with an English-speaking and experienced agent is an important requirement, at least for foreigners that don’t speak the language fluently.

    Korea’s economy performs significantly well, a reason why it’s gained more attention from foreigners recently.

    Another benefit is visa regulations and skilled foreigners can receive residence permits by getting enough points in Korea’s point system, similar to Japan’s.

    In Seoul, prices have soured the past years, if you want to look for cheaper properties, you should have a look at Busan which offers properties at lower prices.

    Other big cities worth having a look at including Daegu and Incheon, explained above.

    If you believe that Korean real estate is pricey and look for a more liquid option, the REIT market becomes increasingly interesting.

    Want to buy property in Korea?

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    • Disclaimer: The content on this website is provided for general information about buying property in Asia, developments, agencies, regulations, taxes, and other related topics. However, we don't guarantee that we keep the content up to date or that it's free from error. We do make mistakes from time to time. We never provide legal advice of any sort.
    • 5 Responses to “How to Buy Property in Korea: A Complete Guide

      1. Rizwan at 6:45 am

        Dear,

        We are a Holding Company based in Abu Dhabi, UAE and have existing investments in Real Estate.

        We are interested in Real Estate investment in Korea and in this regard, our delegation will visit Korea to explore further the real estate investment opportunities.

        Please let us know in which capacity you can assist us on the same. your cooperation will be highly appreciated.

        Regards,
        Rana Rizwan Ali
        Flag Holding LLC

        1. Marcus Sohlberg at 2:43 am

          Hello Rizwan,

          We have passed on your request to one of our agents in Korea. They are a franchised and international brokerage firm with experience of helping foreign buyers.

      2. Khaled at 1:12 pm

        Hi
        From where can I know the price of properties, lands and everything in Korea

        1. Marcus Sohlberg at 3:07 am

          Hi Khaled,

          Despite not always being the most reliable source, Numbeo is one option.

        2. memo at 3:54 am

          Hello
          Where could a real estate agent that is based in the US but wants to market properties in Korea, china, and Japan to people that reside in those counties market listings, for instance specific websites used?

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