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Sleep tomorrow, but invest like crazy: Why apartments are the hot get-rich-quick scheme in Korea

Published: 02 Aug. 2025, 07:00 Updated: 02 Aug. 2025, 18:54

JIN MIN-JI
[email protected]

A cafe in the Raemian One Bailey apartment complex in the posh Seocho District in southern Seoul. The Han River is seen out the window. [JOONGANG ILBO]

In Korea’s frenzied real estate market, apartment prices often rise faster than salaries.

Some middle-class investors are venturing into playing high-stakes games to chase the rewards that can outshine traditional stock trading.

Jeon Chi-woo, an office worker, made a windfall of around 800 million won ($580,000) from a single apartment investment in the upscale Seocho District in southern Seoul in just two years since the purchase.

But that profit came with a heavy price: nearly 70 percent of his household income straight to interest payments.

Still, he’s not slowing down.

His next goal: buying an apartment in one of Seoul’s most coveted neighborhoods in the riverside areas of Apgujeong in Gangnam District or Banpo in Seocho District.

“I’ve seen many people around me who became billionaires through apartment investments, but not with stock trading,” said Jeon.

“They didn’t set out to get rich. They just paid off the debt they borrowed to buy their apartments. Then one day, as property values rose, they simply found themselves wealthy.”

Koreans’ strong faith in real estate has made Seoul a city with the most expensive apartments — which in Korea, refer specifically to high-rise multi-unit residential buildings — trailing only Hong Kong, Zurich and Singapore.

A unit price in Seoul cost $22,875 per square meter ($2125 per square foot) — up 32 percent from five years earlier — beating major cities including New York and London, according to a Mapping the World’s Prices 2025 report published by Deutsche Bank Research Institute in June.

This confidence in apartments, along with Korean financial institutions’ generous loan programs — one of the key sources of their income — has fueled a significant growth in household debt.

Of the 64,000 housing purchases in Seoul this year through mid-July, 71 percent were apartments, according to land ministry data.

The fever has amplified into a problem so serious that President Lee Jae Myung in June has imposed strict loan regulations on home purchases.

Concerns about the rapid growth of household debt are also slowing the Bank of Korea’s (BOK) interest rate cut.

“Korea’s real estate issue is a unique problem specific to our country” as high apartment prices are causing social issues like the low birth rate, said BOK Gov. Rhee Chang-yong in July.

Household debt has reached a critical point that “significantly restricts both consumption and economic growth,” Rhee warned.

A view of apartments in central Seoul from Seoul Sky, the observatory at the top of the Lotte World Tower in Songpa District, southern Seoul, on June 29 [YONHAP]

Apartments: from unwanted to unmissable

The occupancy rate of Korea’s first apartment — Mapo Apartment built in 1962 — in western Seoul was below 10 percent.

Despite the government’s active promotion and reassurances, people back then expressed concerns over issues, including the risk of carbon monoxide poisoning due to the poor ventilation of briquette fumes – the most common source of heating and cooking fuel at the time.

To convince the public, the state-run Korea National Housing Corporation, now the Korea Land & Housing Corporation, even had to conduct animal testing using guinea pigs. The results showed no signs of gas poisoning.

Skeptics, who had lived in other forms of residences, dismissed apartments as a chunk of concrete, arguing that those living in upper floors are cut off from the earth’s natural energy.

But during Korea’s strong economic growth spanning the 1970s to the 1990s, apartments became the most efficient type of housing to accommodate the booming middle class as they allowed for large-scale development.

Seoul’s population surged from 2.45 million in 1960 to a whopping 10.61 million in 1990 .

Apartments soon became symbols of success for the middle class, with moving into larger units at certain life milestones — such as marriage and having children — marking important chapters in their lives.

People also started to appreciate the perks of living in complexes: amenities such as playgrounds and maintenance chores handled by the apartment’s management office.

These services and amenities have become more luxurious in modern-day apartment complexes, further fueling demand.

Some modern apartments — particularly those in upscale neighborhoods — feature community centers that resemble holiday resorts, offering amenities like swimming pools, saunas, movie theaters, indoor golf ranges and even meal services. People’s attachment to apartments grew so strong that the apartment they live in became their identity.

Some luxury apartments became symbols of social status, spawning branded merchandise and even exclusive matchmaking communities for residents.

Since its opening in 2023, a credit card exclusively for residents of Raemian One Bailey — a high-end apartment complex in Banpo — was launched, along with a beer named after the complex.

A matchmaking community also emerged, reflecting the exclusivity of the development.

A 34- pyeong (1,209-square-foot) unit was traded for as much as 72 billion won (approximately $5.15 million).

So betting big on an apartment isn’t just about making money, but also an issue of social recognition, apartment lovers say.

“In Korea, an individual’s wealth is largely tied up in real estate, so I believe the location of your property often clearly signals your financial status,” said the Seocho resident Jeon.

An infinity pool at Gaepo Xi Presidence in Gangnam, southern Seoul [GS E&C]

Apartment myth lives on

Koreans’ unwavering love for apartments has fostered a strong belief that their prices will always bounce back.

Historically, that belief has largely held true — especially for apartments in the capital — and it continues to persist across generations.

“Growing up, I have seen the price of my parents’ apartment in Seoul jump fourfold,” said Lee So-mang, an office worker and a mother of two children.

Lee’s mother bought new apartments whenever she had saved enough from rising rental income on her previous investments.
Seeing her parents’ wealth grow, nearly all of Lee’s assets have been invested in real estate, including apartments.

Since 1985, there were only three times Korea’s home prices fell more than 5 percent on year, according to the Seattle-based financial data provider Macrotrends, citing the Bank for International Settlements.

In 1992, their prices fell 6 percent following the mass government-led housing supply. In 1998, their prices plunged 12.8 percent following the Asian financial crisis. They also fell 5.6 percent in 2023 after the central bank rapidly hiked the interest rate to tame steep inflation.

In the same period, there were 10 times Korea’s share prices plummeted more than 5 percent. The steepest crash was in 2000, caused by the dot-com bubble that left the secondary Kosdaq plunge a whopping 80 percent in that year alone.

“Unlike the stock market, which can experience dramatic crashes, apartment prices have rarely plummeted,” said Kim Jin-yoo, a professor of Urban Transportation Engineering at Kyonggi University and the president of the Korea Real Estate Analysis Association.

“Even when their prices nose-dived, prices eventually recovered over time. So apartments came to be seen as the safest investment in Korea, offering the dual benefit of both practical use and long-term financial return.”

An 84-square-meter Eunma Apartment in Gangnam — located in the heart of Daechi-dong, an area renowned for its prestigious cram schools — was sold for 27 million won when it first opened in 1979.

After more than four decades, the same unit is sold for 4.2 billion won, marking more than a 15,000 percent increase.

The Kospi, meanwhile, has jumped approximately 2,500 percent since the index’s introduction in 1983 to today.

Fever unshaken by low growth

Strong desire for apartments, especially in cities, will likely persist even at times of low economic growth, say experts.

The Organisation for Economic Cooperation and Development (OECD) estimated Korea’s potential growth rate for this year at 1.9 percent, a steep decline from nearly 10 percent in the 1980s, when apartment prices annually jumped by double digits.

Unlike real GDP growth, which is affected by current economic conditions, the potential growth rate refers to the maximum rate at which an economy can grow without triggering inflation, assuming full use of available labor and capital.

“In an era of low growth, people’s purchasing power will increase more slowly, since GDP growth will decline,” said Prof. Kim. “So overall, even for apartments, it will be difficult to see the kind of rapid price increases we saw in the past when Korea’s economy grew steeply."

Instead, apartment prices are projected to become highly polarized.

“Prices will hold up in key areas, as places where many people live tend to maintain their value,” said Lee Eun-hyeong, a research fellow at Korea Research Institute for Construction Policy, noting "tower mansions" — high-rise condominium buildings — in Tokyo. “To see the kind of sharp increases we saw in the past, there would need to be some major developments in those areas."

Polarization has already begun, led by apartments in the capital city.

While the average apartment price in Seoul jumped 48 percent in July from the same month five years earlier, the average apartment price in six metropolitan cities outside Seoul rose 4 percent over the same period, according to KB Land, a real estate data provider.

“My mother told me that apartments in Seoul are like cash because they are always high in demand,” said investor Lee, who plans to sell all her current properties to buy a unit in Seoul. “I don’t think I’ll ever have to worry about financial hardship with the ownership of an apartment in Seoul,” she added confidently.

BY JIN MIN-JI [[email protected]]