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Koreans turn to overseas real estate investments as local economy stagnates

Published: 29 Apr. 2025, 16:19

Air conditioner outdoor units are fixed on the outer wall of an apartment building while a Japanese national flag flutters in Tokyo, Japan, June 28, 2022. [REUTERS/YONHAP]

As the domestic economy slows Korean investors are turning to overseas real estate amid fluctuating currency exchange rates.

One such investor is Han Sang-yoon, a 39-year-old writer, who recently purchased a 33-square-meter (355-square-feet) apartment in Kumamoto, Kyushu, Japan, for 3 million yen ($21,100). It was his second overseas property investment after buying a similarly sized apartment in Fukuoka last year for 10 million yen.

“The first place I bought has doubled in value in yen terms, and I collect 55,000 yen a month in rent,” Han said. “The investment costs and returns are better than Korea, and there is less uncertainty about real estate policy in Japan, so I plan to expand my investments.”

An increasing number of Korean investors, dubbed “investment nomads,” are seeking higher returns overseas. The trend is accelerating as Korea's economy slows and the won remains weak. Korea’s net external financial assets surpassed $1 trillion for the first time last year. Despite tariff tensions under U.S. President Donald Trump, Korean individual investors still purchased $15.4 billion worth of U.S. stocks on a net basis this year.

These investors also spent more than 500 billion won on overseas real estate purchases last year. According to the Bank of Korea data obtained by lawmaker Cha Gyu-geun of the Rebuilding Korea Party, Koreans remitted $375.8 million overseas to acquire real estate between January and November 2024, already exceeding the total amount remitted in 2023, which was $366.5 million.

Interest in U.S. real estate investment has slowed after the minimum investment for U.S. investor visas rose to $800,000 in 2022. Yet purchases of overseas real estate continue to rise as investors turn to Japan, Britain, Australia and the United Arab Emirates.

Townhouses in Japan [ALL JAPAN REAL ESTATE ASSOCIATION]

While wealthy Koreans previously moved abroad to avoid high inheritance and gift taxes, today's investment nomads have more complex motivations.

“Korea’s slow growth, regulations on multiple homeownership, and political instability from late last year all contributed,” said Choi Hwan-seok, head of Hana Bank's real Estate investment advisory center. “In addition, increased study abroad and tourism have lessened the younger generation’s resistance to buying homes overseas.”

Japan, with its proximity to Korea, has become particularly popular. So-called “property inspection tours” allow tourists to scout real estate opportunities while traveling. Between January and November 2024, Koreans remitted $36 million to purchase Japanese housing, nearly triple the amount from 2023 and the highest since 2014. Japan allows foreigners to buy and sell property without restrictions.

“The weak yen and Korea’s regulations on multiple homeowners combined to double the number of real estate consultations about Japan since last year,” said Noh Yoon-jung, CEO of Beakseung and author of the book “I Sold Seoul and Bought Tokyo.” Beakseung is a Japanese real estate agency for overseas investors.

“Because small apartments in Japan require less investment than in Korea, not just wealthy individuals but even salaried workers in their 30s are showing interest.”

Interest in Japanese real estate remains strong even as the yen strengthens. In Tokyo and other major cities, both rental yields and property prices are rising.

“If Korean investors set up a corporation in Japan, they can borrow money at interest rates in the low 2 percent range, while rental yields are higher than in Korea,” said Yang Jong-wook, a team leader at Shinhan Bank’s real estate investment advisory center. “Demand remains strong in Tokyo, Osaka and Kyoto.”

According to Shinhan Bank, the average rent for small apartments, under 30 square meters, in Tokyo reached 98,346 yen in February 2025, up 7 percent from a year earlier.

The Tokyo real estate price index, published by Japan’s Ministry of Land, Infrastructure, Transport and Tourism, rose to 170.9 in December 2024, up 33.8 percent over five years. Nationwide, real estate prices rose 25 percent during the same period.

Young Koreans are also increasingly interested in running accommodation rental businesses, such as Airbnb, in Japan. By utilizing vacant rooms for short-term stays, they can earn higher returns than through traditional monthly rentals.

“Since sharing my business experiences on social media last September, I have received so many consultation requests that it is affecting my work,” said Hwang Dae-sung, a 54-year-old who has operated a guesthouse business in Osaka for a decade. “Most inquiries come from people in their 30s, and even one high school student lied about their age to get a reservation here in Osaka.”

Reporters see the apartment complexes and the roads where a mobility will be tested at Toyota’s Woven City during a tour in Susono, Shizuoka prefecture, Saturday, Feb. 22. [AP/YONHAP]

Meanwhile, demand for EB-5 U.S. immigrant investor visas has surged recently for education purposes.

“After U.S. President Trump proposed a 'gold card' plan selling U.S. permanent residency for $5 million, consultation calls for the $800,000 EB-5 investor visa have skyrocketed as people rush to secure green cards before flight costs rise,” an immigration consultant said.

The EB-5 visa program, unlike Australia's or Canada's, does not require a high-level education, English proficiency or direct management of the business. If one parent secures a green card, the spouse and children 21 years and under also receive residency, making the country an attractive option for families focused on education.

A lawyer surnamed Lee, currently practicing in Singapore, noted that Singapore is also becoming a preferred destination for the wealthy.

“Family office requirements are relatively relaxed, and tax exemptions allow people to preserve and grow their wealth,” Lee said.

Experts caution that if Korea’s economy remains mired in slow growth, the movement of capital abroad could accelerate.

“With economic growth stagnating and the stock market sluggish in the $30,000 per capita income era, investors have no choice but to look overseas,” said Hwang Sei-woon, a senior researcher at the Korea Capital Market Institute. “Diversifying assets across countries and benefiting from higher returns could have positive effects.”

However, many warn against concentrating investments too heavily in particular countries or assets.

“Concentration leads to side effects. I am particularly concerned about Korean investors pouring excessively into the overheated U.S. stock market,” said Kim Young-ik, an economics professor at Sogang University.

“Excessive capital outflows could reduce liquidity, discourage investment and eventually make it harder for companies to raise funds through IPOs or bond markets,” Lee Yoon-soo, another economics professor at Sogang University, added.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY YEOM JI-HYEON, JEONG JIN-HO [[email protected]]