Buying a home abroad is becoming an increasingly popular investment among affluent Koreans now. A cooling domestic property market coupled with the won’s rally against the greenback is prompting Korean investors to turn to overseas property markets.

• The Korean government
  To slowdown the domestic real estate market
  - 2005.8: Increased capital gain tax and property tax for owners of more than two properties
  - 2006.3: 50% tax on developing profit, as well as, placing restrictions on obtaining a mortgage loan
  - 2007.1: Unveil construction costs to the public, limiting selling prices and placing restrictions on DTI
  
  To lessen restriction on investing in foreign real estate
  - 2006.1: $1 million remittance limit on purchasing foreign real estate for residential purpose
  - 2006.3: Abolished the law on $1 million remittance limit on purchasing foreign real estate for residential purpose
  - 2006.5: $1 million remittance limit in purchasing foreign real estate for investment purpose
  - 2007.2: Increased remittance limit on purchasing foreign real estate for investment purpose to $3 million
  - 2007.11: Overseas remittance to be liberalized to maximum $50,000 per year.
  
  -1st quarter of 2008 expected: Abolishing the law on remittance limit on purchasing foreign real estate for investment purpose
  
  
• Dramatic increase in foreign real estate market fund
  
  the Korean Finance Ministry reported $1.33 billion of local investors` funds were invested in overseas real estate projects during the first half of 2007. The semi-annual total for overseas real estate investment is more than 70 percent higher than the $750 million recorded during the same period last year.
  
  This fund is widening its targets to South East Asia countries, including Vietnam, Malaysia, Thailand and U.S., Canada, New Zealand, Australia and European countries as well
  
  
• Immigration, studying abroad, and retirement
  
  Korea is the country that aging is being progressed in the fastest pace in the world, and it is one of the most important issues preparing old age for the middle aged. Koreans are considering retirement immigration and the Southeast Asia real estate market is popular for those who think about spending life there after retirement. The purchases are also mostly confined to homes for children studying abroad in North America
  
  
• Active foreign expansion of construction and development companies
  
  On 2007, foreign construction project of $10 billion indicates that Korean construction companies are expanding rapidly to foreign markets. Companies are facing difficulties in the domestic market due to the lack of demand for apartment units in regions other than Seoul and decrease in government’s construction projects, limits on sales prices to be set in place, the domestic market is unclear. This is forcing companies to move out to foreign markets especially for the Korean medium sized companies
  

Since the government has imposed higher domestic property and capital gains taxes, private Korean investors and corporations are investing heavily on the foreign real estate market.

Based on information provided by the Bank of Korea, in 2005 investment in the foreign real estate market was only $9 million; however, in 2006 overseas property purchases by Koreans, including the corporate sector, amounted to $780 million. More than 2,380 cases of foreign property purchase were reported, compared with 47 cases a year earlier. Furthermore, it is expecting to hit $1.5 billion in 2007, and ongoing on 2008.

Korean corporations purchased commercial land in foreign real estate market for $230 million in 2006, which has increased significantly compare to $13 million in 2005.

“Overseas Property Acquisition Trends of Domestic Residents: First Half of 2007” report announced by the Bank of Korea (BOK),  $600 million worth (1,992 cases) of overseas realty purchase were declared by Korean residents, recording a 86 percent year-on-year jump. The declared number leaped by over two-fold (103 percent).