RE: For outside of London, where is the opportunity now for a property that expected to sell in 5 to 7 years’ time?

The two main areas for growth are Edinburgh and Birmingham. Both of these are experiencing significant levels of capital appreciation which is set to continue moving forward.

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RE: As a foreigner that invests in a UK property at a total of GBP 700,000 including equity and debt, how much tax would I pay?

This again relates to stamp duty, assuming that this is not a first property you would pay GBP 46,000 in stamp duty for a GBP 700,000 purchase price. This is the same amount regardless of being a foreign or local based investor.

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RE: What are the expected costs or kind of costs that would incur when purchasing a property in the UK (city) (around GBP 250K)?

The main cost for any property purchase is stamp duty and in the UK there is an additional 3% charged if the purchaser owns property anywhere else in the world. On the assumption that the buyer does, and a purchase price of GBP 250,000 you would pay GBP 10,000. The other costs are the legal/conveyancing which is typically GBP 1-1,500.

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RE: How is the commercial property development near Manchester [United Kingdom]?

We do not get involved in commercial real estate in Manchester, or the North of England. There is a severe lack of financing for it, meaning most people have to buy cash, and in our opinion less potential for capital appreciation than residential property.

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RE: What is the cap rate for the area in Manchester [United Kingdom]?

The cap rate for Manchester is approximately 3-4% taking into account all costs (management fees, service charges, and ground rent). Some developments offer slightly more but this is the average.

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RE: What is the stamp duty when investing in South Korea’s real estate?

The stamp duty ranges between KRW 50 – 350,000 (up to USD 320), depending on the value of the property. The stamp duty is comparably low compared to other countries, but one also needs to add an acquisition tax on top of this.

posted in leo_cm_wong-q-as
RE: What does a foreign investor need to be aware of when investing in South Korea real estate?

There are several things that foreigners (especially non-residents) need to be aware of when investing in South Korea. First is that it is difficult for foreigners to apply for local mortgages. The easiest way is to apply for a mortgage in one’s home country or pay everything in cash. Or one can look for international banks such as HSBC, Standard Chartered, Citibank, Agricultural Bank of China, and China Construction Bank that have offices in South Korea. Among these, Standard Chartered is one bank that offers mortgages to foreigners that reside in Korea. One needs to provide a Certificate of Local Residency, Certificate of Foreign National Registration, Certificate of Immigration, and Certificate of Employment (or Certificate of Business Registration) to apply for a mortgage.
· The second is that in South Korea, there are two major types of rental system, which are the Jeonse and the Wolse system. The Jeonse system is not well-known in other countries, and it means that the tenant submits a lump-sum pay, say 50~60% of the sale price, to the landlord for the contract duration as a deposit. Later, the tenant gets the money back. This means that the landlord can use this money during the contract duration for other investments, such as stocks, and receive profits bigger than the rental incomes otherwise received. The Wolse system is same as the common rental system in other countries. That means, the tenant pays 1-3 months of rent in deposit, then they pay the rent monthly.
· Due to Korea’s unique Jeonse system, investors tended to purchase homes and rent them out for Jeonse deposit, and then use that deposit to buy another unit with a little bit of loan. This market structure, combined with the trend toward low interest rates in the past few decades, has contributed to exacerbating the housing price bubble. To combat this, the current government has introduced 21 new regulations in the past 3 years to increase taxes on those who own more than one property. So right now, before investing in South Korea real estate market, it is very important to check the latest regulations regarding purchasing properties as there may be adjustments or introductions of new regulations anytime.
· Also, there is a scheme called Immigrant Investor Scheme for Real Estate in South Korea. This scheme grants F-2 (Resident) status to foreign investors and their accompanying family members who invested a minimum of 500,000,000 KRW in South Korean real estate products designated by the Minister of Justice. If they have maintained the investment(s) for the next 5 years, they are further given F-5 (Permanent Resident) status.

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RE: Which area in Seoul do foreigners tend to invest in?

According to Korea Appraisal Board, in the past 5 years foreigners have invested around US$10,976,763,200 in South Korean real estate market. This is around 0.76% of the country’s entire real estate market.
· Among the various nationalities that invest in South Korean real estate, investors from the States used to invest the most. However, from 2016, Chinese investors started to invest more capitals than before, and as of 2019 Chinese investors invested 3 times more than the US investors in South Korean real estate.
· It is worth noting that the areas that investors from the States and from China tend to be different. It is assumed that this is because Chinese investors tend to buy or sell properties to fellow Chinese rather than to Korean locals. In 2019, Chinese investors invested the most amount of money in Siheung, followed by Bucheon and Ansan. These three cities are all satellite cities of Seoul. However, these three cities are all industrial regions, so it can be assumed that the Chinese buyers probably purchased real estate in these regions not for investment purpose but to actually live in them and to work in nearby factories or workshops. In fact, the types of properties that were most bought in these areas were residential, such as units in apartments or villas. Apart from these three, Chinese investors used to invest a lot in Jeju Island from the late 2000s to mid-2010s, but in recent years they have been investing more in Seoul than Jeju.
· As of 2019, the investors from the United States invested the most in Yongsan (in Seoul), Gangnam, and Seocho (in Seoul). Yongsan is where the United States Forces Korea is located, so it is not surprising that this area was invested the most. It is worth noting that Gangnam and Seocho are both wealthy districts in Seoul. (Source: https://eastsky3483.tistory.com/199)

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RE: Can foreigners own property in South Korea? Can foreigners own the land?

Yes, foreigners can buy property (both residential and commercial) and/or land in South Korea. As of now, there are no restrictions against them doing so. However, there are three Acts to comply with. First is The Foreigner’s Land Acquisition Act. This act says that a foreigner’s property sale contract must be notified to the head of the Shi, Gun, or Gu (city, county, or ward) within 60 days after the contract was made. Processing time normally takes within 3 hours. Also, the foreigner shall obtain permission from the head of Shi, Gun, or Gu before the conclusion of the contract if the land is either:
o Where the military operates
o Cultural heritage area
o Or ecosystem conservation area
· In case the foreigner does not apply for a permit, although they were required to do so, then they will either be fined or face imprisonment.
· The second is Registration of Real Estate Act. This act delineates the correct procedure when registering a property. It applies to both Korean nationals, foreign residents, and non-residents. The act includes details regarding property ownership, one’s rights to rent out property, mortgages, and easement. The third is Foreign Exchange Transactions Act, which only applies to foreigners who are non-residents in South Korea at the time of buying the property. This Act has the guidelines to keeping the Won (official currency in South Korea) and international payments on a “balanced” level. It is recommended that one asks their Solicitor or real estate agent to confirm whether the property needs any special approvals referring to above Acts.

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RE: Is it a good time to invest in South Korea real estate now?

Yes, we think it is a good time to invest in South Korea right now. Although the South Korean government has introduced a series of new regulations to control the housing prices (especially Seoul’s) from rising further in the past few years, they have not increased the housing supply. In this case, the housing market may be restrained in short-term, but in the long run the housing price will keep rising. If the government really wants to restrain the housing price in Seoul or in the capital area (including the satellite cities of Seoul), they should distribute the jobs in Seoul, especially in CBD, GBD, and YBD, or they should provide more housing supply in Seoul. However, this is very unlikely, as Seoul is already quite dense. So yes, we think it is still profitable to invest in South Korea now, especially in Seoul. The investors may need to put in more money to purchase real estate right now, but in the long run the housing price will keep rising.

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