• Buying a Property in Seoul: The Definitive Guide

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    Seoul is the prime spot for investors in Korea, most people also decide to live here, for studies or work.

    I’ve been in Seoul myself and know that it’s a great city, offering all the amenities that many foreigners (and myself) want.

    The fact is:

    Korea gets increasingly popular and the amount of foreigners grows with a fast pace, especially in Seoul.

    Even if property is a bit more expensive, compared to other countries, you can find good deals if you look in the right areas.

    In this article I explain how you can buy property in Seoul, the capital of Korea.

    Seoul property market

    Seoul has long been the preferred option when foreigners buy residential and commercial properties in South Korea.

    And it’s not surprising.

    It’s the capital and has been ranked as the 16th safest city in the Safe City Index 2017, 1st in Bloomberg’s Global innovation Index ranking, and named as the “Best International Business Meeting Destination” by Business Traveler.

    Almost 20% of the country’s population live in Seoul, foreigners traveling to South Korea mostly choose Seoul too.

    Not surprisingly, demand and prices are higher compared to other cities…

    Strong market the past years:

    The property market experienced a sharp growth in the last few years, but has currently slowed down a bit.

    It’s mainly due to new regulations and a recent tax increases introduced by the government, to curb the rising prices. The capital gains tax has been increased for people who own more than one property.

    Nowadays, buyers also struggle with tighter mortgage regulations.

    Not to forget: there’s an oversupply of newly built apartments, and housing units located mainly in the suburbs.

    So:

    Looking at South Korea overall, the prices are decreasing on average, whilst the market is doing slightly better in Seoul.

    The city is considered among the most densely populated cities in the world (not as high as Manila though), albeit the population has shrunk since the early 1990’s, due to lower fertility rates.

    At the same time, the number of foreigners in South Korea has doubled in just one decade.

    Foreigners in South Korea

    There are more than 2 million foreigners (almost 4% of the total population) currently living in South Korea, most of them residing in Seoul.

    South Korea is among the countries where population growth rate is very low, but there is surge in numbers of foreigners living in the country to compensate the decline.

    It’s expected that the number of foreigners will even surpass 3 million (!) by 2021, making foreigners around 6% of the total population.

    The increase of foreigners, along with a strong middle class, drives the property market in cities like Seoul.

    So how’s it predicted that the market will perform in the coming years?

    Unfortunately, not very well, if you seek high yields…

    The fact is:

    At the moment I’m writing this article, there are thousands of unsold residential units in the city.

    Although there’s an influx of foreigners and foreign investment, that has resulted in growth (mainly in the commercial sector) in the last few years, the recent tax increase and stricter lending laws have curbed the growth.

    Seoul is also experiencing an ever-increasing supply of new and modern apartments, which is far more than the actual demand.

    According to Korea Center for International Finance, there’s an oversupply of residential units that will increase the downward pressure on the housing market. Another report by Credit Suisse also indicates the same trend.

    To summarize:

    The property prices in Seoul are higher than any other city in the country, but you can still find affordable apartments in the city suburbs.

    Where should I buy property in Seoul?

    Even if the market experiences a downward pressure, mainly due to an oversupply of property, an aging population, tighter lending policies, and an increased capital gains tax, the housing market in Seoul can still pay off, if you know where to invest.

    First of all, you need to know how Seoul is built up geographically.

    Seoul is divided into metropolitan areas and nonmetropolitan areas, in total, there are 25 administrative areas in the city.

    The metropolitan area is among the most densely populated areas in the world, so the prices here are quite high.

    On the other hand, most of the new apartment buildings and new housing projects are built in the nonmetropolitan areas and comparably cheaper.

    Average cost

    On average, a family apartment in Seoul costs 250 million won, which equals to USD 250,000.

    So: I think we can both agree that the average price is not so high and way lower compared to buying property in places like Taipei and Hong Kong.

    As mentioned, the metropolitan area is densely populated and very expensive. So you have to turn to the suburbs and newly developed areas to find low-cost properties.

    Below, I have listed some interesting areas.

    Buying in Magok District

    Magok District is an area that was developed quite recently, it’s located in the Southwestern parts of Seoul.

    You can find both commercial and residential properties in this area.

    In addition to research and development centers for some of the top technology brands in the world, including LG, you can also find prime residential compounds.

    The area also features top universities, a huge central park, and the mass transit system that connects Magok District with the city’s commercial and central hubs like Gangnam and Yeouido.

    The prices here are lower on average compared to the main business areas located in metropolitan areas.

    Buying in Digital Media City

    Another newly constructed area in the suburbs is the state of the art Digital Media City (DMC).

    This area is located in the Northwestern parts of Seoul, in Sangnam-dong.

    It’s part of the new Sangnam Millennium City Plan that also features an Eco Village, a World Cup Stadium, and World Cup Park.

    DMC is a newly constructed area, offering serviced apartments that are mainly targeted to foreigners, making it an attractive place to invest.

    The area is expected to attract a larger number of foreigners in the coming years, making it even more interesting.

    Buying in the Business Districts

    Although the three main business and commercial districts, Gangnam (GBD), Central Business District (CBD), and Yeouldo (YBD) are the most expensive, price growth is also higher due to a greater demand.

    Gangnam is situated in the southern part of the city, just south of the Han River. Property prices here are the highest in the country.

    Just to summarize: the four most expensive areas are

    a. Gangnam-gu

    b. Songpa-gu

    c. Seocho-gu

    d. Cheongdam-dong

    Even if the areas are more expensive, the price growth is also the highest, with good rental incomes.

    But if your budget is limited, you should look at other areas, especially the suburbs.

    Pay attention, though:

    Overall, there are a lot of newly developed suburbs in Seoul that allows you to buy apartments at a low price, but the price growth and rental yields are also low.

    You can find some mega housing projects in suburbs like Goyang with a lot of empty apartment buildings.

    Most of the Koreans and foreigners want to live near the metropolitan areas and business districts, which makes properties in these areas more expensive.

    These areas are also attractive due to a higher demand and price growth.

    Real estate agents and listing companies

    Buying property in Seoul, or overseas in general, can be a bit tricky.

    You need help from a solicitor and a real estate agent to find property, finalize the deal and to transfer ownership.

    Below, I have listed few well-known real estate agents who can help you with buying property in Seoul.

    a. Best Real Estate

    b. Housing Seoul

    c. Colliers International (Specializes in commercial real estate)

    d. Seoul Housing Realty Consulting

    e. Green Real Estate Consulting

    Conclusion

    Seoul is getting increasingly popular among foreigners, driving up the demand and prices.

    Property prices have increased much the past years, we currently see a decline in the market. If you seek high yields, you should turn to other countries.

    Many investors don’t only seek higher yields though, but want to buy property in prosperous and stable nations, that’s why Korea can be a good choice.

    It all comes down to what your goal is.

    If you want to buy cheaper properties, you should do your research well, targeting the suburbs instead of the pricey areas in the city center.

    Want to buy property in Korea?

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    1 Responses to “Buying a Property in Seoul: The Definitive Guide

    1. Ronald Nelson at 6:17 pm

      I am retired US Navy captain. I am American. Wife Korean. Ideally looking for a house with a small yard, 3 bedroom near 8th Army for access to Medical, Commissary, Exchange, etc. Also will consider a 3 BR Condo. Coming in November for Korean wedding. Korean relatives in metro Area. Willing to take train, bus or drive. Wife speaks Korean, I do not.

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