In less than 15 years, the proportion of the elderly population in South Korea has nearly doubled. The population of people aged 65 or over has surpassed the percentage of those in their 20s (12%) and 30s (13%). By the end of 2025, Korea is expected to become a “super-aged” society, with the proportion of the population aged 65 or over exceeding 20% (KOSIS). A sharp rise in the elderly population has led to considerable interest in the senior housing market, which is still in its early stage in South Korea, thus leaving much to be explored.
Figure 1: Trend of the Ageing Population
Source: KOSIS
Figure 2: Classification of Senior Facilities
Source: JLL
According to the classifications of senior welfare facilities under South Korea’s Senior Welfare Act, privately-funded senior housing and welfare houses for seniors fall under the category of senior housing in the commercial real estate. Senior housing facilities grant their residents access to communal space, hobbies, healthcare and convenient services. In 1988, Yudang Village marked the beginning of Korea’s senior housing market. Today, notable senior welfare facilities include The Classic 500, Samsung Noble County, The Signum House and St. Mary’s Nursing Home.
Initially, senior welfare facilities were predominately operated by individuals or SMEs. Going into the 2010s, insurance companies such as Shinhan Life and KB Life Insurance set foot in this arena. As the market continued to bloom, domestic conglomerates such as Lotte Hotel, NH Life Insurance, and Chongkundang started developing their own senior housing assets. Most renowned senior housing facilities are concentrated in Seoul and Gyeonggi-province, but there are also ongoing projects in cities like Busan. Additionally, the government has been expanding investments in developing senior towns. When the Ministry of Land, Infrastructure and Transport and the Korea Land and Housing Corporation recently announced a public offering for private businesses to undertake a healthcare REIT project in Hwaseong, Gyeonggi-do, approximately 70 companies expressed interest in participating.
Although privately-funded senior housing and welfare houses for seniors provide similar services, there are some differences. Privately-funded senior housing cater to individuals aged 65 or older, offering options to either purchase the asset or sign a rental agreement. The Classic 500, Korea’s most renowned senior housing asset, falls under this category. On the other hand, welfare houses specifically target those aged 60 or above, operating solely on a rental system. This distinction arises from the legal limitations surrounding the resale of senior housing to ineligible occupants, to serve as a residential welfare facility for the elderly.
Rents vary greatly depending on the property. Some offer only basic services such as housing functions and meal service, while other high-end residential facilities provide a wide range of programs and advanced care services. In Seoul, the average monthly living cost for two people in the senior housing is estimated to range between KRW 2-4 million per month accompanied by a lumpsum deposit.
Considering the rising demand from a rapidly ageing population as well as constrained supply, the senior housing market is well-positioned for growth. However, the regulatory barriers impacting the profitability of new senior housing projects act as major headwinds, thereby limiting potential new entrants to tap into this market.
More on 'Residential' in 'Korea'
- Co-living in Korea: unveiling new market opportunitiesAugust 4, 2023
- Real estate policies of South Korea’s new presidentMay 19, 2022
- The Korean REITs market is set to surgeSeptember 3, 2020
- Multifamily rental housing on the rise in KoreaMarch 25, 2019
- Proptech – a paradigm shift for Korea’s real estate marketNovember 21, 2018
