Foreign corporations are attempting to expand the domestic housing leasing market, while large corporations that have been involved in corporate leasing business are also pushing to increase supply for market defense. In particular, competition is heating up between KT Estate, a subsidiary of KT Group, and SK D&D, a subsidiary of SK discovery. SK D&D is growing its business by acquiring and merging with companies engaged in the same business.
KT Estate has also launched efforts to promote its own brand, "Remarkville," and strengthen its brand power. As the jeonse market continues to shrink and foreign corporations make inroads into the domestic leasing market, there is a sense of urgency among domestic corporate leasing companies that they may lose their "territory," prompting them to accelerate their efforts. The rapid transition from the unique jeonse system in the domestic market to monthly rents is believed to be a reason why corporations are looking to expand the corporate leasing market.
According to the real estate industry on the 10th, KT Estate, a real estate development subsidiary of KT Group, will add new supply to its rental housing brand "Remarkville" on the 24th in Jayang-dong, Gwangjin-gu, Seoul. A total of 282 units of Remarkville are expected to be available in the complex called "Eastpole" developed in the area. KT Estate is a wholly owned subsidiary (100%) of KT engaged in real estate development. Since 2016, it has been the leading company to pioneer the corporate rental housing sector in South Korea under the "Remarkville" brand. A KT Estate official noted, "As the leading company that first initiated corporate rental housing in South Korea, we plan to unveil new business sites to be supplied." Currently, KT Estate Remarkville has supplied 3,284 units in seven locations, including Dongdaemun, Yeongdeungpo, Gwanak, Gunja, Gwangjin, Busan Station, and Daeyeon-dong.
SK D&D is also striving to expand its corporate leasing market. SK D&D is the largest shareholder with a 31.27% equity stake held by SK discovery and is a company where real estate development accounts for 80% of overall profits. It has been supplying rental housing under the brand "Episode" since 2020, and in March, it merged with a company in the same field, "Local Stitch," along with its subsidiary D&D Property Solutions Co., Ltd. (DDPS). Local Stitch is a company that has operated 22 branches centered in Seoul for about 10 years. Together, the total rental housing supplied from Episode and Local Stitch is approximately 6,200 units (5,600 units from Episode + 600 units from Local Stitch). A SK D&D official stated, "Our goal is to actively increase the rental housing operating volume of both Episode and Local Stitch to supply a total of 10,000 units by the end of this year."
Large corporations' expansion of the corporate rental housing business is related to the rapid reorganization of the domestic leasing market towards monthly rent. It is also influenced by the entry of foreign corporations into the domestic market. According to the industry, Morgan Stanley, one of the world's top three investment banks, is engaged in the rental housing business in collaboration with Gravity Asset Management, a South Korean asset management company. U.S. private equity firm Kohlberg Kravis Roberts (KKR) and U.K. asset management firm ICG are also entering the sector by establishing subsidiaries or forming funds. U.S. real estate development companies Hines and JLL (Jones Lang LaSalle) are also considering market entry.
According to the commercial real estate comprehensive service company R Square, the median monthly rent for dwellings provided through corporate leasing methods in the Gangnam and Seocho districts of Seoul has risen to 1.44 million won during the 2023-2024 period. The average monthly rent for corporate dwellings in Seoul is 900,000 won. The number of contracts for corporate rental dwellings is also steadily increasing. In 2023, the number of contracts increased by 15% compared to the previous year, and there was a 29% rise last year.
Kim Kyung-min, a professor at Seoul National University's Graduate School of Environmental Studies, said, "Large domestic and foreign corporations are expanding their businesses centered around the high-income one-person household market, which can pay high rents. While it is desirable to supply a variety of housing types, the government should consider ways to work with these corporations to lower rents to a level that more people can afford and provide housing."
Kim Jin-yu, a professor in the Department of Urban Transportation Engineering at Gyeonggi University, stated, "The transformation of jeonse into monthly rents is occurring quite rapidly in the domestic rental market, and there is an increasing number of tenants who are willing to pay high costs of several hundred thousand won to live on a monthly rent. This is creating a favorable environment for the expansion of corporate leasing market businesses."