(This article was originally posted on Korean Economy on September 18^th, 2024 in Korean and translated. See the original article through URL link below) 

URL:모건스탠리, 한국 임대주택 투자…해외 큰손들 주거시장에 눈독 | 한국경제 (hankyung.com)

Morgan Stanley has started investing in Korean rental housing. Foreign private equity funds (PEFs), including Kohlberg Kravis Roberts (KKR), are increasingly acquiring residential real estate in Korea, including rental properties.

According to the investment banking (IB) industry on the 18th, Morgan Stanley recently acquired a mixed-use building in Gil-dong, Gangdong-gu, Seoul, from Kyobo Asset Trust for 20 billion KRW through a fund managed by Gravity Asset Management. Morgan Stanley purchased 97.5% of the shares in this fund, while the remaining 2.5% was acquired by SL Platform, a company specializing in operating rental housing.

Morgan Stanley plans to collaborate with Gravity Asset Management to remodel the mixed-use building into rental housing. Gravity Asset Management is a relatively new management company, established in 2022, and gained recognition through its investments, including in the Tmark Grand Hotel in Myeong-dong. Morgan Stanley contributed capital from its ‘Prime Properties Fund’ to the Gravity-managed fund. The Prime Properties Fund is a core fund that invests in the Asian region, with an expected return of around 10%. Starting with the Gil-dong rental housing project, Morgan Stanley plans to increase its investments in Korean rental housing.

Foreign investors, including Morgan Stanley, have been actively investing in Korea’s residential market, including rental housing and co-living spaces. KKR and British global asset management firm ICG have been particularly expanding their residential real estate investments in Korea. KKR has partnered with the Hong Kong-based co-living company Weave Living to invest in The State Seonyu Hotel in Yeongdeungpo-gu, and around Hoegi Station. ICG established a real estate fund worth approximately 300 billion KRW last year for the development of co-living facilities in Korea.

Experts suggest that these foreign investors are drawn to the high growth potential of the Korean rental housing market. With the rapid increase in single-person households, the demand for rental housing is surging. According to Statistics Korea, the proportion of single-person households in the country increased from 27.2% in 2015 to 34.5% in 2022.