S. Korea's Real Estate Investment Threshold Is Doubled in May, US$ 780 000.
By Hyong-jin Kwon
Gangnam Style Statue in Gangnam district, Seoul
S. Korea's Real Estate Investment Amount Is Doubled in May
from 500 million → KRW 1 billion (US$ 780 000) and changed name to ‘Tourism/Recreational Facility Immigrant Investor Scheme’
Ministry of Justice, extension notice until April 30, 2026
Seongsanpo, Jeju Island
Jeju Island's Real Estate Investment Immigration Standard raised to KRW 1 billion (US$ 780 000) and extended for 3 years util April 2026. The Jeju Island's real estate investment immigration system, which was introduced to revitalize the local economy by attracting foreign capital, but was in danger of extinction due to controversy over reckless development and speculation mainly by Chinese investors, is maintained. According to the Jeju Special Self-Governing Province on the 1st of May,
the Ministry of Justice decided to extend the sunset deadline for the Jeju Real Estate Investment Immigration System, which ended on the 30th of April 2023, until April 30, 2026. Instead, the threshold was raised by raising the investment standard amount from the current 500 million won to 1 billion won. The name of the system was also decided to be changed from the current 'Real Estate Investment Immigration System' to the 'Tourism/Recreational Facility Investment Immigration System'. These revised contents will be included in the 'Announcement of Standards for 'Real Estate Investment Area, Investment Targets and Investment Amount' to be announced by the Ministry of Justice.
Through the 11th Investor Immigration Council's dicussions of the Ministry of Justice, the investment targets were determined including :
1. Jeju Special Self-Governing Province,
2. Pyeongchang Alpensia in Gangwon-do,
3. Songdo, Yeongjong and Cheongna in Incheon Free Economic Zone,
4. Yeosu and Gyeongdo in Jeollanam-do,
and 5. Haeundae and Dongbusan in Busan.
The Real Estate Immigrant Investor Scheme grants resident status (F-2) free of economic activities to foreigners who invest in real estate according to the standards announced by the Minister of Justice, such as investment area, investment subject, and investment standard amount. It is a scheme that grants permanent residence status (F-5) if it is maintained for more than 5 years. If you obtain permanent residency, you can receive equal treatment with Korean citizens, except for the right to vote and hold public office. Admission to public education is possible, and the same medical insurance system and benefits as Korean citizens are provided.
In Jeju Island, the system was firstly introduced in 2010.
After the introduction of the system, large-scale development projects in the Jeju area that had been drifting for a long time were actively carried out, resulting in positive effects such as revitalizing the construction industry in the province, increasing tax revenue, and expanding tourism infrastructure. However, as most of the investment was focused on real estate development such as condominiums for sale, controversy arose as side effects such as overheated real estate prices, land encroachment by the Chineses, oversupply of accommodation facilities, and indiscriminate environmental destruction ensued.
As a result, the province limited the scope of application of the real estate investment immigration system to tourism complexes and recreational facilities through institutional improvements from 2015, and investment demand plummeted after that.
In addition, as factors such as the Corona 19 crisis and China's capital outflow restrictions overlapped, there was little investment after 2020, leading to controversy over the effectiveness of the system. Earlier, on the 30th of April, Jeju Island proposed to the Ministry of Justice a plan to supplement and extend the investment standard amount from 500 million won to 1 billion won ahead of the end of the lunar system. Choi Myeong-dong, head of the Economic Vitality Bureau of Jeju-do, said, "The Ministry of Justice's decision to extend this extension largely reflected Jeju-do's proposals, such as an increase in the amount and a name change."
“We will strive to increase the number of high-value-added tourism and recreational stays.”
Unfortunately threshold of Real Estate investment went up on the 1st of May for 1 billion KRW (US$ 780 000).
The real estate undefeated myth collapsed.
House Price Crash since autumn 2022
in S. Korea
Gangnam, south bound of Han River, the richest district of Seoul; where land prices rose 5,000 times during the past 60 years. This myth of permanently successful economic power of Gangnam gave birth to the 'Gangnam Style' dance globally leading K-POP. Real estate prices in Gangnam, Seoul have jumped 55 times over the past 40 years. However, in autumn 2022, Gangnam and Seoul real estate prices plummeted by up to 30% by impact of Covid-19 economic crisis and Ukraine war, were hit again by a rise in high mortgage rate recently, and the myth of high returns in real estate investment collapsed for the first time historically in S. Korea.
Given the momentum of the Korean robust economy, 'Miracle of Han River' which has consistently made something out of nothing, Korea's real estate bubble will not follow "the same path as Japan's lost 30 years." However, real estate investment will not be perspective following the myth of the past 50 years, and 2023 is still a rather confusing year with unsold new condominiums and empty houses in the provinces.
Rather than risky real estate investment immigration (threshold of 1 billion won), invest in the government fund of IISPB (500 million, interest-free) and payback principal guarantee after 5 years is major avenue (F-2 Visa process duration 3 weeks)
If you invest in a public business as well as real estate, a more lenient assessment will be made to determine your eligibility for permanent residency.
The 'Immigrant Investor Scheme for Public Business'
(IISPB appx. US$ 390,000)
If you invest 500 million KRW (approximately US$ 390,000 as of June 13) or more (300 million KRW if you are age 55 or older and have financial assets worth 300 million KRW : US$ 230,000 ) in public investment products of the Ministry of Justice, you can obtain F-2 residential status which gives you economic freedom and acquire Permanent Residency after 5 years of investing as a F-2 Resident.
Even though the fund may not produce any profit, it has no risk as it protects your principal amount of investment with a guaranteed return.
* According to government discussions in May, minimum amount is subject to escalate for USD 540 000 (700m KRW).
Procedure for Investment and Acquisition of Permanent Residency
Enter Korea on a short-term stay visa or without a visa
Investment Consulting Korea Finance Corporation
Information Gathering Seoul Immigration Office
Investment Decision /Payment Confirmation Korea Finance Corporation
Change to F-2 Residential Status Seoul Immigration Office
Change to F-5 Permanent Resident Status An Immigration office in your area
* S.Korea Government Residence F-2 Visa and Entrepreneur D-8 Programs