Real estate investment in Korea has generally been focused on residential, that is, apartments. This is because, thanks to the continuously rising apartment prices, there was no harm in buying one with small capital without a loan from the bank, with a rent in place called 'Jeonsea'. Recently, the demand for multi-family houses, studios, and one-room apartments is increasing because of the preference of regular income through monthly rent while also expecting to capital gain from the price gain. After the era of residential-oriented real estate investment, recently, investors with some spare capital tend to investing in shopping malls, motels, and small buildings.
Recently, changes in domestic and global economic conditions, taxation and investment conditions, and, most importantly, changes in population structure, housing supply rate, and housing ownership have made many people rethink real estate investment.
In general, as a criterion to distinguish between speculation and investment, speculation is defined as taking a profit through a rise in price in a short period of time, while it is defined as an investment which additionally brings some profit upon disposal along with regular income over a long period of time. In the past, it wouldn't it be fair to say that the investment in the apartment is almost speculative? Naturally, in the difference between speculation and investment, the degree of risk related to capital investment is also taken into consideration. You may think that there is no risk in a situation where you just buy and the price goes up, but isn't the current situation a little different? If the price does not rise in the absence of a fixed periodic income from real estate, the opportunity cost of the investment will increase and it may be better to put it in a low-interest term deposit in a bank. It is also the logic of the market that many residential real estates are converted from "Jeonse " to monthly rent.
In this situation, as the middle of 2017 passes, individual investors' interest in overseas real estate investment is increasing. After 'Foreign Exchange Liberalization' in the mid-2000s in Korea, the acquisition of overseas real estate became free to a large extent. In the early days, residential real estate in developed countries was mainly based on the demand for the students abroad and immigration rather than the concept of investment. Acquisition of overseas real estate by a corporation is recognized as a part of corporate activities as it is made in the form of foreign direct investments(FDI) and was not accurately reflected in the statistics on overseas real estate acquisition. You can tell through statistics.
After the liberalization of overseas real estate acquisition, through partnerships with local companies around the world, the real estate systems of various developed countries and the real estate and sale items of each city were introduced to Korea through a number of seminars. Rather than analysis or regional comparison, it focused on national or regional procedures and laws. Even now, there are no major changes in the procedures related to the acquisition of overseas real estate at the time and the characteristics of each country.
After the US financial crisis in the second half of 2008, foreign investment decreased considerably due to exchange rate volatility but continued to increase for the next 10 years. In recent years, due to changes in the investment environment such as the stabilization of the US real estate market and the leveling of the global market, a significant portion of overseas investment is mainly made in emerging markets with high yields. This is not unique to Korea, but a phenomenon common to real estate investors around the world.
In this regard, in a situation where interest in overseas real estate has recently been growing again, I have prepared this blog/guide in the hope that it would be helpful to provide my experience gained from the foreign real estate market and the field experiences gained while consulting on overseas real estate in Korea. However, since the scope is too broad to cover all the questions related to overseas real estate investment like an encyclopedia, here, it is not aimed at experts such as fund managers or asset managers in overseas real estate industries, but general investors in overseas real estate. Thus, we try to focus on the basic common sense and knowledge required to invest as indivisual investors.
In the process of doing something, it is much more efficient and rational to hire an expert in the field or work with experts to make use of their expertise, rather than studying everything on his own and becoming an expert himself. It can prevent unreasonable judgment in the process. There are experts in every field of investing in foreign real estate, and you can get help at some cost, and such cost can be called “Well Spent”. However, even when hiring an expert, you need basic knowledge to understand what he is saying, to judge, and to decide the direction. Therefore, here, we want to provide guidelines on what to talk about, ask what kind of questions, and point out what to check working with such experts.
Good to know information.