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Daegu's rental market offers moderate yields ranging from 1.0% to 1.6% for long-term rentals, with short-term rentals potentially reaching 4% gross yields.
As of September 2025, property investors in Daegu face a stabilizing market where yields vary significantly by location and property type, with central neighborhoods like Suseong-gu commanding premium rents while outlying areas offer more affordable entry points.
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Daegu rental yields currently range from 1.0% to 1.6% annually for long-term rentals, with short-term rentals achieving higher returns up to 4%.
Central districts offer better yields but require higher initial investment, while the market shows signs of stabilization after recent price corrections.
| Property Type | Gross Yield Range | Average Monthly Rent |
|---|---|---|
| Studios/Officetels | 1.4-1.6% | ₩300,000-₩700,000 |
| 2-Bedroom Apartments | 1.2-1.4% | ₩500,000-₩1,300,000 |
| Family Apartments (85m²+) | 1.0-1.2% | ₩729,000-₩1,300,000 |
| Short-term Rentals | 2.0-4.0% | ₩65,000-₩77,000/night |
| Central Districts | 1.4-1.6% | Premium rates |
| Outlying Areas | 1.0-1.2% | Budget-friendly |
| Purchase Price/m² | - | $4,650 average |
What are the different average rental yields in Daegu depending on property type?
Daegu's rental yields vary significantly across property types, with gross yields ranging from 1.0% to 1.6% annually for traditional long-term rentals.
Officetels and studios deliver the highest yields at 1.4-1.6%, particularly attractive to young professionals and students who prefer smaller, centrally-located units. These compact properties benefit from high demand in business districts and near transportation hubs.
Two-bedroom apartments generate moderate yields of 1.2-1.4%, representing the sweet spot for many investors targeting young families and working professionals. Family-sized apartments (85m² and larger) typically yield 1.0-1.2%, offering lower percentage returns but greater stability and lower vacancy rates.
Short-term rental properties, including Airbnb units, can achieve significantly higher gross yields of 2.0-4.0%, though this comes with increased management responsibilities and higher operational costs.
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How do yields vary across different neighborhoods in Daegu?
Central Daegu districts command premium yields, with Suseong-gu and Nam-gu delivering the highest returns at approximately 1.6% annually.
These prime neighborhoods attract higher rental rates due to superior infrastructure, proximity to business centers, and better transportation connectivity. Suseong-gu particularly benefits from its reputation as an upscale residential area popular with both local families and expatriates.
Outlying districts like Dong-gu and Dalseo-gu offer yields closer to 1.0%, reflecting lower rental rates but also reduced property acquisition costs. These areas present opportunities for investors seeking affordable entry points into the Daegu market.
The yield differential between central and peripheral areas has remained consistent, with central districts maintaining a 0.4-0.6% yield premium over outlying neighborhoods.
What is the average surface size of rental properties, and how does yield change with size?
Daegu rental properties typically range from compact 20-40m² studios to spacious 100-140m² family units, with yield generally decreasing as property size increases.
| Property Size | Typical Use | Gross Yield Range |
|---|---|---|
| 20-40m² (Studios) | Students, young professionals | 1.4-1.6% |
| 50-65m² (2BR) | Young couples, small families | 1.2-1.4% |
| 65-85m² (2-3BR) | Growing families | 1.1-1.3% |
| 85-140m² (Family) | Established families | 1.0-1.2% |
| 40-60m² (Officetels) | Young professionals | 1.4-1.6% |
Smaller units benefit from higher yields due to greater demand density and faster tenant turnover, particularly in areas with universities and business districts. Larger family units offer more stable, long-term tenancies but at lower percentage yields.
What is the average total purchase price of these properties, including transaction fees and taxes?
As of September 2025, the average apartment price in Daegu stands at $227,000, with properties priced at approximately $4,650 per square meter.
Total acquisition costs add 6-10% to the purchase price, including acquisition taxes, notary fees, registry costs, and closing expenses. Daegu's transaction fees average around 4.6%, which is lower than Seoul's rates.
A typical 65m² two-bedroom apartment would cost approximately $302,250 including transaction fees, while a 40m² studio might total around $198,600 with all costs included. Family-sized properties of 100m² average $510,500 including transaction costs.
Foreign buyers should budget for additional legal and advisory fees, potentially adding another 1-2% to total acquisition costs for proper due diligence and compliance.
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What ongoing ownership costs do I need to factor in?
Property ownership in Daegu involves several recurring expenses that significantly impact net rental yields.
Property taxes range from 0.15% to 0.5% of assessed value annually, while rental income tax applies progressively from 6% to 40% depending on total income levels. Monthly maintenance fees for apartments typically cost ₩100,000-₩250,000, varying by building amenities and services.
Property insurance is mandatory and typically costs several hundred USD annually, while utilities for vacant periods or shared areas can add ₩400,000-₩700,000 monthly for medium-sized apartments.
Smart investors reserve approximately 1% of property value annually for maintenance, repairs, and upgrades to maintain rental competitiveness and property condition.
How would a mortgage impact the net rental yield, given current interest rates?
Mortgage financing significantly reduces net rental yields, with interest rates varying substantially between local and foreign borrowers.
Local buyers access mortgages at 3.65-4.5% interest rates, while foreign investors typically pay 5-7% with minimum down payments of 30-50%. For foreign buyers financing at 5.5%, net yields often fall below 1% or turn negative after accounting for all ownership costs.
A leveraged investment requires careful calculation: subtract annual mortgage interest, property taxes, rental income tax, and maintenance costs from gross rental income to determine net yield. Many foreign investors find cash purchases more viable given the interest rate differential.
Current mortgage conditions make highly leveraged investments challenging for generating positive net yields in Daegu's current market.
What are the typical rental prices for different property types in Daegu today?
Daegu rental prices in September 2025 reflect a stabilized market with competitive rates across property types.
| Property Type | Monthly Rent Range | Premium Locations |
|---|---|---|
| Studios/Officetels | ₩300,000-₩700,000 | Up to ₩900,000 |
| 2-Bedroom Apartments | ₩500,000-₩1,300,000 | Up to ₩1,600,000 |
| Family Apartments (85m²+) | ₩729,000-₩1,300,000 | Up to ₩1,800,000 |
| Luxury Units | ₩1,500,000+ | ₩2,500,000+ |
| Short-term (Daily) | ₩65,000-₩77,000 | ₩100,000+ |
Short-term rental properties command daily rates of ₩65,000-₩77,000 ($47-$70), with annual revenue potential of $7,400-$9,000 per unit for well-managed properties.
What renter profiles are most common in Daegu?
Daegu's rental market serves diverse tenant demographics, each with distinct preferences and requirements.
Students represent a large segment, particularly near universities, typically seeking affordable studios and officetels with basic amenities. Young professionals favor modern officetels and mid-sized apartments near city center and transportation links, willing to pay premiums for convenience and amenities.
Families prefer larger apartments and villas, especially in Suseong-gu and Nam-gu, prioritizing space, safety, and school proximity. The expatriate community is growing, particularly in central, luxury neighborhoods, often requiring furnished units and international amenities.
Each segment drives demand in specific property types and locations, creating targeted investment opportunities for informed investors.
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We did some research and made this infographic to help you quickly compare rental yields of the major cities in South Korea versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
What are the average vacancy rates by property type and neighborhood?
Daegu apartment vacancy rates average 5-10% historically, though recent oversupply concerns are stabilizing as of September 2025.
Officetels and studios experience slightly higher vacancy rates, particularly in peripheral districts where supply has outpaced demand. Central neighborhoods maintain lower vacancy rates due to consistent demand from professionals and students.
Short-term rental properties face seasonal occupancy variations, with rates ranging from 38-56% annually, resulting in significant vacancy periods outside peak travel months.
Family-sized apartments typically enjoy the lowest vacancy rates due to longer lease terms and stable tenant profiles, though turnover requires more time to fill vacant units.
What are the differences in yield potential for short-term rentals versus long-term rentals?
Short-term rentals significantly outperform long-term leases in gross yield potential, achieving 2-4% returns compared to 1-1.6% for traditional rentals.
Airbnb and similar platforms generate higher daily rates but require active management, higher operating costs, and navigation of regulatory requirements. Occupancy rates of 38-56% mean substantial vacant periods that reduce effective yields.
Long-term rentals provide steady, predictable income with minimal management overhead, though yields are compressed by Daegu's competitive rental market. These properties offer better net yields after accounting for management time and operational complexity.
Success in short-term rentals depends heavily on location, property presentation, and management quality, making them suitable for hands-on investors or those employing professional management services.
How have rental prices and yields changed compared with five years ago and one year ago?
Daegu's property market experienced significant fluctuations over recent years, with prices peaking in 2023 before moderating through 2024-2025.
Property prices fell approximately 4% from 2023 peaks through 2024, with yields stabilizing as rental rates remained relatively steady while purchase prices declined. The five-year trend shows overall appreciation followed by recent correction.
Rental rates have remained relatively flat over the past year, with jeonse (key money deposit) and long-term rental markets showing slight depression. Short-term rental rates have held steady despite broader market softness.
Current conditions suggest market stabilization with modest growth prospects as oversupply conditions gradually improve and demand patterns normalize post-pandemic.
What are the smartest investment choices right now and how does Daegu compare with other major cities?
Daegu currently offers attractive entry-level investment opportunities compared to Seoul's expensive market, though yields lag behind Busan's tourist-driven returns.
| City | Gross Yield (%) | Price per m² (USD) | Investment Appeal |
|---|---|---|---|
| Seoul | 2-4 | $6,500-$8,000 | Lower yield, high prices |
| Busan | 3-5 | $5,500 | Higher ST rental yield |
| Daegu | 1-1.6 | $4,650 | Moderate yield, affordable entry |
| Incheon | 3-4 | $4,500 | Stable market |
Best investment opportunities include officetels and studios in Suseong-gu and Nam-gu targeting young professionals, value apartments for local families in growing districts, and short-term rental units for higher gross yields.
Daegu's market positioning offers affordable entry with yields exceeding Seoul while prices remain accessible. The smartest choices target areas with stabilized supply and strong demographic demand drivers.
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Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Daegu's rental market presents moderate but stable investment opportunities for informed investors willing to target specific demographics and neighborhoods.
While yields may not match other major cities, the combination of affordable entry prices and market stabilization creates attractive conditions for long-term wealth building through real estate investment.