Morgan Stanley, GIC bet on Seoul's co-living market as solo living becomes the norm

The supply of co-living spaces in Seoul has increased more than twentyfold in less than a decade, driven by the rapid growth of single-person households, which now account for 40 percent of all households in the capital city.

As co-living properties — managed residences with private rooms and shared amenities — increasingly gain recognition as a standalone asset class, some of the world’s biggest institutional investors have piled into funds targeting Seoul’s burgeoning co-living market.

Morgan Stanley, the Canada Pension Plan Investment Board (CPP Investments) and Singapore’s GIC, a sovereign wealth fund, are among those seeking to capitalize on the trend by teaming up with local firms to convert properties in Seoul’s prime districts into co-living spaces.

Locations range from the office worker-packed streets of Yongsan District in central Seoul to a university hub in Seodaemun District in western Seoul.

Unlike jeonse rental residences, which require a large upfront deposit, co-living typically requires a deposit of just a few months’ rent, with monthly rents slightly above conventional rentals. In return, tenants get well-maintained facilities, shared amenities such as study rooms and gyms, and sometimes cleaning services — a trade-off that appeals to young people who lack the savings for a large deposit but are willing to pay more for a comfortable living environment.

Still in its early stages, Seoul’s co-living market is growing rapidly, with supply reaching 7,377 rooms in the first quarter of 2026 — nearly 22 times the 338 rooms in 2017 — according to Rsquare, a real estate information provider.

Betting on rental shift

Institutional investors have largely stayed out of Korea’s residential market, where tenants have long favored jeonse to preserve savings, as landlords return the full deposit at the end of the lease.

But investors are beginning to see an opening as the appeal of jeonse wanes. Falling property prices in 2023 left some landlords unable to return tenants’ deposits, fueling fears of deposit fraud. Higher interest rates have also raised the cost of financing large deposits, while the rise of single-person households is reshaping demand toward monthly rentals.

In 2024, U.S. investment bank Morgan Stanley teamed up with Seoul-based Gravity Asset Management to acquire an officetel building in eastern Seoul’s Gangdong District for 13.3 billion won ($10 million), converting it into Gwell Homes, a 130-unit rental property. It has also transformed an officetel in Seongbuk District, near Korea University and Sungshin Women’s University, into Homes Anam, a 60-unit co-living space with shared meeting rooms, a fitness room and study areas.

CPP Investments made its first direct foray into Korea’s residential market last year through a 500 billion won joint venture with Seoul-based housing provider Mangrove. CPP Investments holds a 95 percent stake in the venture, which has broken ground on Mangrove Dangsan, a 441-unit co-living development aimed at working professionals in one- and two-person households. The venture plans six projects, and this one is scheduled for completion in late 2028.

“Living is an investment theme we are pursuing across the Asia Pacific, where we see opportunities arising from factors such as urbanization, evolving demographics and changing housing preferences,” said Gilles Chow, Head of Real Estate, Asia Pacific, CPP Investments. “Korea is part of that broader regional approach. In Korea, particularly Greater Seoul, the combination of a large, concentrated urban population and demand for high-quality rental accommodation provides a supportive backdrop for the sector.”

Other institutional investors include Singapore’s sovereign wealth fund GIC, which invested in the Episode Sinchon 369 and Episode Yongsan 241 co-living spaces.

“As household structures change and Korea’s rental market shifts toward monthly rent, the potential for business models built around long-term ownership of rental housing and steady operating income is growing,” said Cho Kang-tae, CEO of Mangrove.

The share of monthly rent over jeonse in Seoul hit a record 51 percent through September this year, up from 43.7 percent in the same period last year, according to Seoul Real Estate Information Plaza. The shift comes as single-person households have become Seoul's most common household type, accounting for 40.5 percent of all households in 2025, up from 34.9 percent in 2020, according to the Ministry of Data and Statistics.

“In Seoul, housing demand is concentrated, but high land and construction costs make it difficult to supply quality, small-unit rental housing. This structural imbalance between supply and demand is creating investment opportunities in professionally developed and managed rental properties,” Cho added.

Backed by government push

The government’s push to attract institutional investors to help ensure a stable supply of rental housing, coupled with domestic conglomerates’ reluctance to enter the politically sensitive sector, has created an opening for foreign investors, say industry insiders.

In August, the government announced plans to let registered rental housing operators that buy newly built homes to borrow up to 60 percent of a property’s value, regardless of whether it is in a regulated area, as part of efforts to expand housing supply. Previously, mortgage lending to ordinary residential rental business operators was generally prohibited in regulated areas.

But easing financing constraints may not be enough to draw domestic conglomerates into the market, as political sensitivities around rents remain a hurdle.

“Foreign companies are less likely to face public backlash for charging high rents,” said Lee Eun-hyeong, a research fellow at the Korea Research Institute for Construction Policy. “If a Korean conglomerate entered the market, it could be accused of exploiting young people and other vulnerable tenants, even if it offered better facilities that justified higher rents. That perception has discouraged domestic conglomerates from entering the sector.”

The political risks are not new. In 2015, the government introduced a real estate investment trust (REIT)-based program to encourage private companies to provide rental housing for middle-income households. To attract investment, it eased most regulations, but critics argued the policy led to high initial rents.

Investors say Korea’s rental housing market needs further changes to mature. Tax and financing hurdles, along with policy shifts under successive administrations, continue to make long-term rental operations difficult to sustain profitably, industry experts say.

“Because co-living is not a distinct legal property category but operates across officetels, apartments and lodging facilities, regulations vary by building type and investment structure,” said Choi Kyu-jung, a research analyst at Rsquare Research Center. “Investors must navigate a complex set of rules governing property use, acquisition and development, as well as eligibility for tax benefits. Unpredictable policy shifts add another layer of uncertainty.”

Industry participants say greater regulatory predictability is also essential to attracting more institutional capital.

“Tax and financing rules must be more predictable throughout the investment lifecycle, from development and acquisition to long-term ownership and exit,” said Cho of Mangrove. “Institutional investors typically invest after a property has established a track record of occupancy and operating income, rather than immediately after completion. If financing requirements do not align with the timing of investment, the policy’s impact may be limited.”

BY JIN MIN-JI [[email protected]]