'Landlords Are Chinese' Now Common... Record High Foreign Transactions in Buildings

Record High Foreign Building Transactions in Q1
Foreigners Evading Regulations Increase Domestic Land and Building Purchases

Seoul Songpa-gu villa and multi-family housing dense area

While housing transaction volumes have shown signs of slowing down this year, the purchase of domestic buildings by foreigners has significantly increased.

According to the Korea Real Estate Board on the 21st, in the first quarter of this year, transactions of buildings (including detached houses, multi-family houses, apartments, and commercial officetels) by foreigners in Korea totaled 5,280 cases, marking about a 6% increase compared to 4,979 cases in the same period last year. This is the largest quarterly figure since the Real Estate Board began compiling related statistics in January 2006. Looking at monthly data, March recorded 2,141 transactions, the second-highest number ever after 2,273 cases in July last year.

Foreign transactions include cases where either the buyer or seller is a foreigner. Transactions of buildings by foreigners have continued to rise since surpassing 10,000 cases in 2014, with △14,570 cases in 2015 △15,879 cases in 2016 △18,497 cases in 2017 △19,948 cases in 2018. In 2019, the number decreased by 11.0% to 17,763 cases compared to the previous year, but surged by 18.5% to 21,048 cases last year, exceeding 20,000 cases for the first time.

The feverish buying of domestic buildings by foreigners has led to controversy over 'regulatory reverse discrimination.' According to the December 16 real estate measures, for speculative and speculative overheated zones, a loan-to-value ratio (LTV) of 40% applies for housing priced under 900 million KRW, and 50% for regulated areas. If the house price exceeds 1.5 billion KRW, loans are completely prohibited. The screening process, including funding plans, has become more stringent. On the other hand, foreigners can easily invest in domestic real estate without being subject to domestic regulations such as LTV by using their home country or global banks.

In fact, some foreign transactions have revealed speculative cases. The National Tax Service announced in August last year a case of speculation involving a 40-year-old American who purchased 42 apartments through gap investment (transaction amount of 6.7 billion KRW).

According to the National Tax Service, the number of apartments purchased by foreigners in Korea reached 23,167 units from 2017 to May of last year. Among these, apartments purchased by Chinese nationals accounted for 58.6% of the total, amounting to 13,573 units.

Meanwhile, the controversy over reverse discrimination against domestic residents has also appeared in the land sector, not just buildings.

According to the status of foreign land ownership received by Kim Sang-hoon, a member of the People Power Party, from the Ministry of Land, Infrastructure and Transport, the land area owned by foreigners increased by about 70% over the past four years (from 12 million square meters to 20.41 million square meters).

In particular, the number of land parcels owned by Chinese nationals increased from 24,035 to 54,112 square meters during the same period, an increase of about 30,000 parcels (120%), showing the highest growth rate.

Rep. Kim pointed out, "The procedures for purchasing land are almost the same for foreigners and domestic residents, but various regulations are harsh on domestic residents," adding, "It is necessary to restore fairness through appropriate institutional improvements in line with the principle of reciprocity."

This content was produced with the assistance of AI translation services.