Global Investors Target South Korea's Rental Housing as Single Households and Monthly Leases Grow

A 500 Billion Won Venture Signals a Changing Rental Market

Canada Pension Plan Investment Board (CPPIB) has formed a 500 billion won ($344 million) joint venture with Korean developer MGRV to build rental homes, marking its first direct investment in South Korean residential property. The deal is part of a broader push by global investors into a market being reshaped by smaller households, changing rental arrangements and government efforts to attract institutional capital.

As of August 22, 2025, the list of companies entering or expanding in the sector includes Greystar Real Estate Partners, The Living Company and Morgan Stanley. Their interest comes as South Korea moves beyond a housing model dominated by apartments built for sale and rental homes owned by individuals.

Single households accounted for 41.5% of all households nationwide by the end of 2024, compared with 29.5% in 2015, according to government and industry data. That is an increase of 12 percentage points. At the same time, more tenants are moving away from jeonse, the Korean arrangement that replaces monthly rent with a large refundable deposit.

For investors, the opportunity is to own and operate rental buildings for years, collecting regular income. For residents, the changes bring more compact apartments, shared facilities and professional management, alongside concerns about rent levels and access to affordable homes.

Smaller Households Are Changing What People Need

South Korea's population is aging and becoming more urban, while living alone is increasingly common. In Seoul, nearly four in ten households consist of one person. The growth of households with one or two people is creating demand for housing that differs from the larger apartments traditionally built for families.

Young professionals, students and seniors are seeking smaller homes in convenient city locations. Some want flexible rental arrangements and access to shared kitchens, gyms and spaces where they can work. Buying a home has also become less attainable for many, making renting a longer lasting part of their lives.

Investors see these changes as a source of demand for professionally managed accommodation. Their initial strategies often focus on student housing and compact urban apartments for young adults, with plans to expand into senior living as the population ages.

The dates behind the shift show how demographic change, policy and investment have come together:

• 2015: Single households represented 29.5% of households nationwide.
• August 2024: The government announced its Rental Housing Supply Plan, proposing changes to encourage institutional investment and long leases.
• End of 2024: The national share of single households reached 41.5%.
• 2025: Australia's The Living Company opened its Korean office, making the country its first overseas hub.
• July 2025: Greystar launched its Korean operations.

Why Tenants Are Moving From Jeonse to Monthly Rent

Jeonse has long been central to South Korea's rental market. A tenant pays a large deposit, often equal to 50% to 80% of the property's value, instead of paying rent each month. The landlord returns the deposit when the lease ends.

The arrangement was once regarded as beneficial to both sides, but rising property prices and stagnant wages have made the initial payment harder for tenants to afford. Recent rental scams, including cases in which landlords could not return deposits, have also weakened confidence in the system.

Monthly rental agreements are consequently replacing jeonse at a rapid pace, particularly among younger residents and foreigners who may lack access to large amounts of cash or bank loans. A monthly lease changes the financial burden: the tenant makes regular payments instead of having to assemble such a large deposit at the beginning.

For institutional investors, regular rent creates a familiar business model. It gives professional operators an opening to offer shared living accommodation and serviced apartments, bringing property management and tenant services into a market where the relationship has traditionally been between an individual landlord and tenant.

Which Global Investors Are Entering Korea?

The Living Company opened its Korean office in 2025, choosing South Korea as its first overseas hub. The Australian company's decision signals a commitment extending beyond a single property purchase.

Greystar Real Estate Partners, the world's largest rental housing investor, began Korean operations in July 2025. The US company plans to integrate Korea into its $2.6 billion Asia Pacific fund, placing the country within a wider regional investment strategy.

CPPIB's venture with MGRV commits 500 billion won to developing rental homes. For the Canadian pension investor, it is the first direct move into Korean residential real estate. Morgan Stanley has partnered with local developer SK D&D to invest in residential properties, following moves by KKR, ICG, Hines and others.

Foreign institutional investors have been examining the sector for several years. Recent policy changes and the growth of smaller households have accelerated their entry. Their expectations draw on the US and Europe, where professionally managed housing built for rent has become an established category of property investment.

Seoul also offers a rent comparison that attracts investors: despite recent price increases, its monthly rents remain below those in Tokyo, Hong Kong and New York. Investors see potential for rental growth and attractive yields, meaning the income a property generates relative to its cost. For tenants, rising rents would mean higher monthly housing expenses.

From Selling Apartments to Operating Rental Homes

Korean developers have traditionally built apartments to sell to individual buyers. They have relied on project finance, borrowing tied to a particular development, and aimed to exit once homes were sold. The new investment model keeps ownership with the operator, which earns income from tenants over a much longer period.

Housing built for rent therefore requires more than construction funding. Investors need substantial capital, the ability to manage buildings and services, and patience with Korea's complex rules. Their returns depend on running the accommodation successfully after construction, rather than completing a quick sale.

Professional operators are introducing practices used in other markets, including organized property management, tenant services and activities intended to help residents build connections. Shared living developments combine private bedrooms with communal kitchens, lounges and workspaces.

For students and young professionals who move between jobs, schools or cities, that arrangement can provide flexibility, convenience and social contact. The shift also changes what a developer delivers: an operating housing service, rather than simply a finished apartment for someone else to own.

Shared Living Offers Services at a Higher Price

Research from JLL and other industry sources identifies young singles, students and international residents as the main customers for shared living properties. Flexible lease terms and communal facilities are part of the appeal.

Seoul units are typically compact, with a median size of about 23 square meters. A median is the middle value in a set, with half the units smaller and half larger. Shared gyms, workspaces and libraries provide facilities beyond the private room.

The median monthly rent for a Seoul shared living unit smaller than 40 square meters is about 1.13 million won. Premium locations such as Gangnam can command up to 1.7 million won. Rents exceed those of traditional officetels, the studio apartments common in Korean cities, reflecting the services and communal facilities included.

Domestic and foreign investors are entering through different types of property. Transactions include converting unsold officetels and hotels into shared living accommodation, allowing existing buildings to serve a different residential market.

Real estate investment trusts, or REITs, are another route for capital. These investment vehicles pool money to own income producing property. IGIS Residence REITs is leading activity in the sector, while other investors are planning portfolios of shared living properties. Government support for REITs and housing offered on long leases is expected to support further growth.

A Government Plan Encourages Longer Commitments

The government's August 2024 Rental Housing Supply Plan seeks to attract institutional investors, modernize rental provision and address housing shortages. It proposes easing investment restrictions and offering tax incentives, with a goal of supplying more than 1 million multifamily homes for long leases by 2035.

The plan divides business models into supported, semi-autonomous and autonomous housing. Each category carries a different combination of regulation and tax incentives. The framework is intended to accommodate operators taking different levels of government support and commercial independence.

Private rental housing owners can benefit from exemptions on acquisition and property taxes if they commit to leases lasting 20 years and comply with standards governing rent increases. The incentive links financial support to a sustained role in providing rental accommodation.

Implementation requires legislative amendments, and the political environment remains uncertain. For investors considering projects that could operate for decades, the final rules will shape both the income they can expect and the obligations they must accept.

Tenant Protections Shape the Investment Calculation

Korea's tenancy rules protect residents while limiting how freely operators can change rents. Under the jeonse protection framework, increases are capped at 5% when contracts are renewed every two years.

For a household, a limit on increases offers protection against a sudden jump in housing costs at renewal. For a company that owns and manages rental property, the same limit constrains income growth and can reduce the appeal of an investment.

Recent policy changes have relaxed some restrictions, particularly for private rental housing offered over long periods. Investors must still navigate the relationship between tenant safeguards, tax benefits and the conditions attached to particular housing models.

Further proposals concerning foreign ownership have added another layer of uncertainty. Measures under discussion include permit systems, higher taxes for owners of multiple properties and stricter oversight of transactions. The debate covers access to the market, reciprocal treatment of Korean buyers abroad and the risk of discouraging legitimate investment.

Foreign Ownership Draws Attention Despite Its Small Share

Foreign nationals own more than 100,000 homes in Korea, with three quarters of those properties in the greater Seoul area. Their holdings represent about 0.5% of the country's housing stock, but their concentration around the capital has brought affordability and market regulation into the debate.

Chinese, American and Canadian buyers are the most active. Some buyers use financing obtained overseas to bypass restrictions on local loans, drawing attention to gaps in the way transactions are regulated.

Most foreign owners hold one property. A smaller group owns multiple homes, fueling concern about purchases driven by investment demand. Policymakers are considering ways to track and regulate foreign transactions, although legal and constitutional challenges remain.

The debate includes competing assessments of the scale of the problem. Some argue that foreign ownership has a limited effect because it accounts for such a small share of housing. Others warn that unchecked demand could worsen shortages and put more pressure on prices.

Institutional rental investment brings a related policy choice: how to attract money for developing and operating homes while maintaining affordable access for residents. The proposed rules on ownership and transactions form part of the environment in which foreign companies are planning their entry.

Seoul's Supply Pressures Meet a Divided Housing Market

Housing price and rental growth are concentrated in Seoul and its suburbs, while regional markets lag. Newly built apartments in Seoul cost more than twice the national average. Korea's price gap between large and small cities is the widest among OECD countries.

The Korea Development Institute estimates that a cumulative housing shortfall of nearly 900,000 units has developed since 2017. Construction permits and starts have stagnated despite government plans to build millions of homes, leaving demand and the delivery of new housing out of balance.

Rental inflation has stabilized, but supply remains insufficient, particularly for housing with professional management and higher standards of service. That shortage helps explain investor interest in Seoul, even as the broader national property market faces uneven conditions.

Elevated mortgage rates add to housing pressures. Global trade tensions and domestic political uncertainty also weigh on the economy. Investors entering the rental market must account for those conditions alongside the demographic changes supporting demand.

For residents, the outcome will depend on both the number of homes delivered and their cost. A wider choice of managed apartments and shared facilities can meet changing needs, while premium rents can place some of those properties beyond the reach of households seeking cheaper accommodation.

Korean Investors Are Looking Overseas Too

Korean institutions and individual investors are increasingly seeking property abroad even as foreign capital moves into Korea's rental sector. Their destinations include the US, Japan and other developed markets.

Soaring domestic home prices and uncertainty about regulation have made overseas property more attractive. Korean investors are looking for stable returns and diversification, spreading their investments across different markets rather than depending entirely on conditions at home.

The movement of money in both directions shows how closely property markets are connected. Foreign investors see an opening in Korea's changing rental needs, while Korean investors see opportunities elsewhere. Within Korea, the central changes remain concrete: more people living alone, more monthly rental agreements and more companies seeking to own and manage housing for years.

Key Points

• Single households reached 41.5% of Korean households at the end of 2024, up from 29.5% in 2015.
• CPPIB and MGRV formed a 500 billion won ($344 million) rental housing venture, while Greystar and The Living Company established Korean operations in 2025.
• Monthly rentals are replacing jeonse as large deposits become harder to afford and deposit return concerns grow.
• Seoul shared living units smaller than 40 square meters have a median monthly rent of about 1.13 million won, with premium Gangnam locations reaching 1.7 million won.
• The August 2024 housing plan targets more than 1 million multifamily homes for long leases by 2035, with legislative changes needed for implementation.
• Tenant protections, foreign ownership proposals and a housing shortfall estimated at nearly 900,000 units since 2017 shape the investment outlook.
• Korean investors are also buying abroad, seeking stable returns and diversification in markets including the US and Japan.