Episode Yongsan 241, a shared residential brand (Image courtesy of SK D&D)
SEOUL, Jun. 25 (Korea Bizwire) – The co-living phenomenon in South Korea has seen remarkable growth, with facilities in Seoul now able to accommodate up to 7,000 residents, according to a recent report by Savills Korea, a global real estate services provider.
The report, titled “2024 Korea Co-Living Report” and released on June 24, highlights the rapid expansion of this housing model.
Excluding short-term accommodations, the current capacity represents a significant increase since the first co-living facilities in South Korea opened just nine years ago, in 2015.
Investment in the sector has been equally impressive, with cumulative investments reaching approximately 835 billion won.
While initially dominated by domestic conglomerates and startups, the market has recently attracted international investors.
Last year, UK-based asset management firm ICG established a real estate fund worth about 300 billion won to develop co-living facilities in South Korea.
In collaboration with local operator Homes Company, ICG launched Homes Stay Suwon and Homes Stay G-Valley Gasan in the latter half of 2023.
Global private equity firm KKR has also entered the market, partnering with Hong Kong-based rental housing provider Weave Living to acquire The State Seonyudo Hotel in Seoul’s Yeongdeungpo district.
The partners plan to renovate the property into a co-living facility.
Cove, an international co-living company, has formed a joint venture called Cove Korea with Honors Asset Management to develop business models for co-living operations in the country.
The report suggests that the actual market size may be even larger when considering leasing and consignment operations beyond direct acquisitions by investors.
The rapid growth of co-living in South Korea is attributed to the increasing number of single-person households and the shift towards monthly rentals due to recent rental fraud issues.
Additionally, professional operators offering various benefits to residents have effectively catered to tenants seeking high-quality housing.
While the flexible lease terms characteristic of co-living are advantageous for tenants, they can pose challenges for operators in terms of inconsistent rental income and increased marketing costs to attract new residents.
The report advises that to improve investment returns, co-living facilities should be located in areas with high demand from single-person households, such as near universities or industrial complexes.
Hong Ji-eun, Executive Director of Research & Consultancy at Savills Korea, commented, “Co-living is gaining significant attention due to its major advantages of low deposits and contracts with professional operators.”
She added, “With the acceleration of supply, supported by recent amendments to building laws related to rental dormitories, we expect co-living facilities to be developed in various locations in the future.”
M. H. Lee (mhlee@koreabizwire.com)
