Foreign investment shapes Korea’s co-living market

South Korea’s co-living market has been underdeveloped, constrained by regulations and the prevalence of Jeonse, Korea’s lump-sum deposit rental system. However, the market has transformed due to shifting housing preferences, particularly among younger people concerned with high home prices and the risk of losing their Jeonse deposits. The high price-to-income ratio and relatively low rent-to-income ratio have also accelerated this market shift. This move toward monthly rentals created fertile ground for professional co-living operators to grow, attracting notable foreign investor interest.

The first major foreign entry into the co-living market was GIC’s investment in SK D&D (DDPS)’s co-living brand "Episode". This sparked growing interest, translating into increased investment activity, with partnerships between foreign investors and co-living operators steadily rising. Overseas investors have gradually expanded their presence in the domestic market, notably through joint ventures with co-living operators. Acquisitions of ageing officetel and hotel properties for conversion into co-living assets have also been observed.

Foreign investment in the co-living and rental housing sectors has expanded since 2023. This was notably led by ICG’s partnership with Homes Company, which established a co-living fund worth approximately KRW 300 billion. Activity accelerated in 2024 and 2025, with global investors including KKR, Morgan Stanley, and CPPIB expanding through both platform partnerships and portfolio acquisitions. Hines, Invesco, and M&G Real Estate also acquired private rental housing assets to expand their co-living portfolios in Korea. More recently, TPG Angelo Gordon acquired assets operated by MGRV, a domestic co-living operator.

Figure 1: Notable Examples of Foreign Investments in the Co-living Sector

Source: JLL

However, the sector is facing greater policy uncertainty, following the 9.7 and 10.15 real estate measures introduced in late 2025, which aimed to curb rising housing prices, particularly in the Seoul metropolitan area. Under these policies, stringent regulatory designations have been applied broadly across Seoul and Gyeonggi-do, effectively limiting comprehensive real estate tax exemptions for newly acquired purchase-for-lease properties. Furthermore, loan-to-value (LTV) limits for housing acquisitions by rental business operators have been restricted to 0% in regulated areas. This regulatory tightening has contributed to increased wait-and-see sentiment among foreign investors regarding rental housing strategies in Korea.

Despite these challenges, the sector’s fundamentals are expected to remain strong. The growing number of long-term overseas visitors is anticipated to bring additional momentum, as they increasingly favour co-living’s fully furnished, deposit-free model. Demographic shifts towards single-person households and changing housing preferences among younger generations also support sustained demand. That said, Korea’s housing market is highly sensitive to real estate policy changes. Closely monitoring future policy developments and maintaining flexibility in response will therefore be essential.