Is buying property to rent out in Busan still worth it?

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Is Busan buy-to-let still worth it today?

Busan buy-to-let can still work today, but we would only buy when the individual apartment already produces a decent return; the citywide investment case is no longer strong enough to carry an average deal.

That distinction has become more important lately. Busan apartment sales are no longer falling across the board, rents are holding up, and some desirable districts are seeing prices rise again. Yet the recovery is very uneven. The latest transaction tracking based on Ministry of Land, Infrastructure and Transport records counted roughly 4,750 apartment sales over three months across 363 complexes. The average price change was only +0.2%, and just 48% of those complexes had risen.

Rental investors face another constraint: ordinary apartment yields are still modest. A typical family apartment in a decent part of Busan can easily produce only around 2%-3% gross before taxes, maintenance, vacancies and other costs.

At the same time, the Bank of Korea’s latest lending statistics put the average interest rate on new loans at 4.27%. Borrowing at roughly 4% to own something producing roughly 2%-3% gross leaves very little room for error.

We still see opportunities in Busan, particularly where price, rent and location line up unusually well. We just would not buy an ordinary apartment at the ordinary market price and expect Busan itself to make the numbers work.

What we see in Busan now	Latest evidence	What it means for landlords	Our reading
Recent apartment transactions	about 4,750 in 3 months	The market is still liquid	Positive
Average change across tracked complexes	+0.2%	Prices have stabilized more than surged	Neutral
Complexes with rising prices	48%	Recovery remains very uneven	Cautious
Typical family-apartment gross yield	often around 2%-3%	Cash return remains modest	Weak
Average rate on new Korean loans	4.27%	Leveraged deals struggle	Negative

Why has buying a rental property in Busan become harder to judge?

Busan rental property sits in an awkward middle ground right now: the market is healthier than it looked during the downturn, but the numbers are still too weak to call this an obvious buying opportunity.

The latest transaction data show Suyeong-gu’s standard 84-square-metre apartments averaging around KRW 820 million, with recent prices up roughly 1.3%. Nam-gu was around KRW 620 million and up about 2.4%. Busanjin-gu was closer to KRW 450 million and slightly higher. Haeundae, meanwhile, was around KRW 580 million and marginally lower.

That spread tells us far more than a single Busan price index. Investors have started paying up again for certain neighborhoods, while other parts of the city remain soft.

Supply has also become harder to ignore. Ministry of Land, Infrastructure and Transport figures currently show 8,379 unsold homes in Busan. Of those, 3,253 are already completed.

Busan has enough demand to avoid looking distressed, but enough weak supply and demographic pressure to punish mediocre properties.

What rental yield can a Busan apartment actually produce now?

A normal Busan apartment currently tends to produce a low-single-digit gross rental yield, and around 2%-3% is a more realistic starting point for many conventional units than the 5%+ returns some overseas buyers may expect.

Haeundae gives us a useful real-world test because both rental and sales activity are deep.

Recent registered lease transactions put the median monthly-rent contract across Haeundae apartments at roughly KRW 30 million deposit plus KRW 850,000 a month. When we isolate common family sizes, the numbers rise. An 84-square-metre apartment has recently been around KRW 30 million deposit plus KRW 1.2 million monthly, while 85-square-metre units have been closer to KRW 50 million plus KRW 1.3 million monthly.

Current transaction tracking puts the average 84-square-metre Haeundae apartment around KRW 580 million.

Using KRW 1.2 million monthly rent gives KRW 14.4 million in cash rent per year. Against a KRW 580 million purchase price, that is roughly 2.5% gross. If we deduct the KRW 30 million tenant deposit from the owner’s capital tied up in the property, the figure rises to around 2.6%.

Using the slightly higher KRW 1.3 million rent and KRW 50 million deposit gets us close to 2.7% on the purchase price and just under 3% on capital net of the deposit.

Haeundae example	Purchase price	Deposit	Monthly rent	Approx. gross cash yield
Typical 84㎡ case	KRW 580m	KRW 30m	KRW 1.20m	2.5%
Same case, excluding deposit from capital tied up	KRW 550m	KRW 30m	KRW 1.20m	2.6%
Typical 85㎡ case	KRW 580m	KRW 50m	KRW 1.30m	2.7%
85㎡ case, excluding deposit from capital tied up	KRW 530m	KRW 50m	KRW 1.30m	2.9%

Does Korea’s jeonse system make Busan rental yields look worse than they really are?

Jeonse improves the landlord’s financing position, but we should resist the temptation to treat the tenant’s deposit as extra rental income.

Under jeonse, the tenant can provide a very large refundable deposit and pay little or no monthly rent. Under wolse, the tenant normally provides a smaller deposit and then pays monthly rent. Plenty of contracts sit somewhere between the two.

That deposit is valuable to the owner because it reduces the amount of personal capital tied up in the apartment. Suppose we buy for KRW 500 million and receive a KRW 200 million tenant deposit. Economically, we have only KRW 300 million of our own capital sitting in the property while the lease continues.

Historically, this structure was especially attractive when landlords could reinvest the deposit or use it to fund another purchase. It effectively gave property owners a large amount of low-cost capital.

The catch is obvious but important: the KRW 200 million still belongs to the tenant and must be returned.

That becomes dangerous when property values fall, refinancing becomes difficult or the next tenant will only accept a much lower deposit. Korea’s well-publicized jeonse problems over recent years showed what happens when owners build investment strategies around deposits they cannot reliably repay.

For a Busan buy-to-let calculation, we therefore look at both the cash yield on the full property value and the return on our own capital after accounting for the refundable deposit. The second figure can look noticeably better, but it is not the same thing as a genuinely high property yield.

Are Busan rents rising fast enough to make today’s low yields much better?

Busan rents are helping landlords, but rent growth is too gradual to rescue an apartment that starts with a poor yield.

Imagine we buy a Busan apartment for KRW 500 million and collect KRW 1 million a month. That gives us KRW 12 million annually, or 2.4% gross.

If the rent grows by 3% every year while the property price stays flat, after five years monthly rent reaches roughly KRW 1.16 million. The yield on our original purchase price moves from 2.4% to about 2.8%.

Even at 5% annual rent growth for five straight years, the yield only climbs to roughly 3.1%.

The better setup these days is a Busan apartment where rents remain firm while the purchase price is temporarily weak. We would rather buy at a 3.5% starting yield and get modest rent growth than buy at 2% and hope tenants eventually solve the problem for us.

Is Busan property cheap enough compared with Seoul to make buy-to-let attractive?

Busan property looks cheap next to Seoul, but Busan rents are also much lower, so the Seoul comparison tells us surprisingly little about whether a rental investment is good.

A standard 84-square-metre apartment can currently average roughly KRW 820 million in Suyeong, KRW 620 million in Nam-gu, KRW 590 million in Yeonje, KRW 580 million in Haeundae and Dongnae, and around KRW 450 million in Busanjin.

Those numbers can feel inexpensive to anyone used to Seoul’s better-known districts, where equivalent family apartments regularly trade well above KRW 1 billion and can reach several billion won.

But take Haeundae. Around KRW 580 million for a standard family apartment sounds accessible compared with Seoul. Yet monthly rent around KRW 1.2-1.3 million only gives us a gross return in the mid-2% range.

For a landlord, the useful comparison is between the price of the apartment and the rent of the apartment. Once we frame it that way, some cheap Busan properties look expensive and some apparently expensive properties start to make more sense.

Which Busan districts look best for rental property now?

For a Busan landlord today, we find the most interesting hunting ground in places such as Busanjin, Nam-gu, Dongnae and selected parts of Yeonje, where prices remain below the premium coastal districts while tenant demand comes from ordinary daily life.

Busanjin has Seomyeon, Busan’s main commercial core and one of the city’s strongest transport nodes. Apartment transaction tracking currently puts standard 84-square-metre prices around KRW 450 million, well below Suyeong. Separate Ministry-based rental databases show a very large history of monthly-rent contracts across the district, with recent average apartment monthly rent around KRW 500,000 before controlling for size and deposit.

Nam-gu has several different tenant pools: university students, hospital and professional workers, families, and residents around large apartment clusters. Its standard 84-square-metre prices are currently around KRW 620 million, so we would have to be more selective there, but particular smaller properties can make sense.

Dongnae is less flashy and that is partly why we like it. Families value its schools, established residential areas and subway access. Yeonje also benefits from centrality, government employment and strong transport connections, although a standard family apartment around KRW 590 million does not automatically leave much rental yield.

The cheaper districts deserve attention too. Current transaction tracking puts standard 84-square-metre apartments at roughly KRW 310 million in Buk-gu, KRW 330 million in Saha-gu and KRW 340 million in Sasang-gu. That lower entry price can lift yields quickly. A KRW 300 million apartment rented for KRW 900,000 a month produces 3.6% gross, while a KRW 600 million apartment would need KRW 1.8 million monthly rent to match it.

The problem is that cheap prices can reflect weak demand. Busan currently has 8,379 unsold homes, including 3,253 completed units, and Sasang has recently appeared in the city’s unsold-housing management framework.

So the lower-priced districts work only when the apartment still has something concrete pulling tenants in: a subway station, university, hospital, major employer or strong commercial area.

District	Recent 84㎡ price level	Main rental appeal	Main problem	Our buy-to-let view
Suyeong	about KRW 820m	Prestige, coast, strong residential demand	Expensive	Better for asset quality than yield
Nam-gu	about KRW 620m	Universities, families, redevelopment	Price has risen	Selective
Yeonje	about KRW 590m	Central, transport, government employment	Yield can be thin	Selective
Haeundae	about KRW 580m	Deep tenant pool, premium demand	High price relative to rent	Good assets, modest income
Dongnae	about KRW 580m	Family demand, schools, subway	Strong units are not cheap	Interesting when bought well
Busanjin	about KRW 450m	Seomyeon, workers, transport, smaller units	Building quality varies a lot	One of the better places to hunt
Buk-gu / Saha / Sasang	roughly KRW 300m-340m	Low entry price	Supply and resale risk	Deal-specific

Is Haeundae worth buying for rent, or are landlords paying too much for the address?

Haeundae is one of Busan’s easiest places to find tenants, but investors often pay so much for that safety that the rental return becomes mediocre.

The rental depth is real. A database built from registered lease contracts records around 7,700 apartment leases in Haeundae over the latest twelve-month period, split roughly evenly between jeonse and monthly-rent contracts.

Recent contracts show just how varied that market is. Smaller apartments can rent for well below KRW 1 million a month, standard family units often sit around KRW 1-2 million depending on deposit and building quality, while prime towers can command several million won.

Haeundae I’Park, for example, recently recorded a contract around KRW 50 million deposit plus KRW 3 million monthly for approximately 120 square metres. The same district also contains ordinary older apartments renting for a fraction of that amount.

Tourism adds another layer to Haeundae’s appeal. Busan City recorded 2.42 million foreign visitors in the first half of the year, up 43.9% from the same period previously. Foreign visitor card spending jumped 63% to KRW 591.4 billion. Haeundae still captured around 25.9% of that spending.

That supports the district’s restaurants, retail, international profile and employment base, but we would be careful about turning tourism growth into a residential-yield assumption. A normal apartment cannot simply be modeled as an Airbnb.

For a long-term landlord, Haeundae works best when we find a normal unit in a very good location at an unexpectedly good price.

Is Busan’s shrinking population already a serious risk for landlords?

Busan’s population decline is a real long-term problem for rental property, especially for average apartments in places where tenants have little reason to stay.

Busan City’s latest detailed population briefing put the resident population at about 3.24 million. The city lost another 1,866 residents over the reporting period, while net migration was negative by just over 1,000 people.

The age structure is even harder to ignore.

Around 838,000 Busan residents are now 65 or older, equal to 25.3% of the city’s population. The youth population was about 774,000. An aging city eventually needs a different mix of housing, and peripheral family apartments face more pressure as the number of younger households declines.

There is one encouraging detail. Recent migration data show the speed of outflow improving. Busan lost about 1,508 residents through net domestic migration in the first quarter of the year, compared with roughly 3,374 during the same period previously. Outflows among people in their twenties and thirties also became smaller.

Busan is additionally attracting more foreign residents. The city counted around 88,500 foreign residents in the latest available annual dataset, up from roughly 60,000 eight years earlier. International students increased from about 14,600 to nearly 17,800 in just one year.

Those groups can support specific rental pockets around universities, commercial districts and employment centers, but they do not erase the broader demographic problem. A mediocre apartment in a shrinking neighborhood deserves a large discount.

Busan demographic measure	Latest useful reading	Direction	What we take from it
Resident population	about 3.24m	Falling	Citywide demand growth is hard to assume
Residents aged 65+	about 838,000	Rising	Already around one-quarter of the city
65+ share	25.3%	Rising	Aging is a structural housing issue
Youth population	about 774,000	Falling over time	Weakens broad long-term household growth
Q1 net domestic migration	about -1,500	Less negative than previously	Outflow has recently improved
Foreign residents	about 88,500	Rising	Helps selected rental submarkets
International students	nearly 17,800	Rising	Useful near university areas

Are Busan apartment prices finally recovering?

Busan apartment prices are stabilizing and some districts are already rising, but we still do not see a convincing citywide upswing.

The Korea Real Estate Board’s official apartment index showed Busan rising 0.14% early in the year and another 0.04% shortly afterward. Prices then flattened before slipping about 0.04% in the latest monthly reading available through the current transaction dashboard.

The higher-frequency transaction data tell roughly the same story.

Across 4,751 recent transactions in 363 apartment complexes, the average price movement was +0.2%. Only 48% of complexes rose.

Inside that average, Suyeong was up roughly 1.3%, Nam-gu 2.4%, Dongnae 0.6% and Busanjin 0.6%. Haeundae was slightly lower. Yeonje was down about 0.9%, Gijang about 2.7%, and Geumjeong around 4.7%.

The exact percentages will move as more transactions are registered, particularly where volumes are small. The broader pattern is much harder to dispute: Busan is splitting into winners and losers.

As seen above, fewer than half of tracked complexes are currently rising. We would underwrite appreciation at close to zero and treat future price growth as upside.

Can redevelopment make a low-yield Busan apartment worth buying?

Busan redevelopment can justify a weak rental yield, but once we buy for redevelopment potential we are making a redevelopment investment with temporary rent attached.

Old apartments in Suyeong, Nam-gu, Dongnae and Haeundae can trade at values that make little sense if we only compare current rent with purchase price. Buyers are also pricing the possibility of reconstruction, larger future units, improved buildings and increasingly scarce new housing in established neighborhoods.

Samik Beach in Suyeong is one of the clearest examples. The existing apartment’s age and current rental economics do not explain its valuation on their own. The redevelopment story has been embedded in the price for years.

That can create excellent investments when expectations are still too low.

It can also create awful rental properties. Owners may wait years, face large additional contributions, deal with changing construction costs and live through repeated planning delays. During that period, an old apartment may produce weak rent and require maintenance.

We therefore value these properties in two separate pieces. First, what would the apartment be worth if redevelopment took much longer than expected? Second, how much extra are we paying today for the potential future apartment?

If most of the expected gain is already sitting in the seller’s asking price, the low rental yield becomes difficult to forgive.

Does taking a mortgage still make sense for a Busan rental property?

A large mortgage usually makes a standard Busan buy-to-let worse right now because borrowing costs remain above the gross yield on many apartments.

The Bank of Korea’s latest release puts the average interest rate on newly issued loans at 4.27%. That was slightly lower than the previous reading of 4.31%, but the difference is tiny for our purpose.

Take a KRW 500 million apartment producing KRW 1 million in monthly rent. Annual cash rent is KRW 12 million.

If we borrow KRW 250 million at 4.27%, annual interest alone is about KRW 10.7 million.

We have almost used the entire gross rent before paying property tax, repairs, brokerage, vacancy costs or income tax.

Even a 3% gross-yield property struggles with that financing gap. A landlord with a large tenant deposit, little bank debt or unusually cheap financing can change the calculation, but ordinary leverage is currently difficult to justify.

Example	Property price	Annual gross rent	Debt at 4.27%	Annual interest	Position before other costs
Low-yield apartment	KRW 500m	KRW 10m	KRW 250m	about KRW 10.7m	Negative
2.4% yield apartment	KRW 500m	KRW 12m	KRW 250m	about KRW 10.7m	Barely positive
3.0% yield apartment	KRW 500m	KRW 15m	KRW 250m	about KRW 10.7m	Some buffer
4.0% yield apartment	KRW 500m	KRW 20m	KRW 250m	about KRW 10.7m	Much healthier

How much do Korean taxes, tenant rules and foreign-buyer rules change a Busan rental deal?

The legal side does not make Busan buy-to-let impossible, including for foreigners, but it takes another bite out of returns that are already fairly thin.

Invest Korea’s current guidance confirms that foreigners can generally acquire Korean real estate, apart from certain restricted land. Resident and non-resident buyers follow different reporting and foreign-exchange procedures, but foreign individuals can directly own rental property and conduct a leasing business.

A foreign owner may also need a Korean tax manager depending on the structure and residence status. Non-resident buyers have additional foreign-exchange reporting when bringing acquisition money into Korea or moving sale proceeds back abroad.

Taxes matter from the day we buy.

Invest Korea currently lists acquisition tax on residential property acquired for value at 1%-3%, with additional local surtaxes possible depending on the transaction. Annual property tax on housing follows rates in the 0.1%-0.4% range within Korea’s assessed-value system, while comprehensive real-estate tax can apply in certain higher-value ownership situations.

A landlord then has rental-income taxation to consider, followed by capital-gains taxation when the property is sold.

Tenant law also affects how freely we can manage rent. Korea’s Housing Lease Protection Act currently caps an eligible increase in residential rent or deposit at 5% and generally prevents another increase within one year. Specific registered-rental regimes have their own rules as well.

Those protections are not necessarily bad for landlords. A reliable tenant who stays for years can save brokerage fees, vacancy and renovation costs.

They do mean we should read the existing lease before buying an occupied apartment. If the tenant is paying well below today’s market rent, we cannot simply plug a higher advertised rent into our spreadsheet and assume we receive it immediately.

With a 6% or 7% gross yield, a few transaction costs are irritating. At 2%-3%, every one of these frictions deserves attention.

What would a genuinely good Busan buy-to-let property look like today?

A good Busan rental deal today probably starts around 3.5% gross, sits near everyday tenant demand and does not require us to assume strong property appreciation.

That 3.5% threshold is not a law. It is simply where the economics begin to become more convincing.

At 2%, almost everything has to go right. At 3.5%, we have more room for maintenance, vacancy and taxes. At 4%+, the property can start competing with other investments on income, provided the high yield has not appeared because the building or neighborhood is deteriorating.

Smaller apartments are often where the mathematics improve.

Suppose we find a compact apartment near Seomyeon, a university or a busy subway station for KRW 250 million and rent it for KRW 800,000 a month. That produces KRW 9.6 million annually, equal to 3.84% gross.

A KRW 600 million family apartment renting for KRW 1.3 million produces KRW 15.6 million annually, yet the yield is only 2.6%.

We would also look closely at the tenant pool. The strongest property is one that works for several kinds of tenants: a young worker today, a couple next year, a graduate student later and perhaps an owner-occupier when we sell.

Illustrative Busan deal	Purchase price	Monthly rent	Gross yield	How we would react
Premium family apartment	KRW 800m	KRW 1.3m	2.0%	Too weak for income
Ordinary family apartment	KRW 550m	KRW 1.2m	2.6%	Needs another reason to buy
Well-bought smaller apartment	KRW 300m	KRW 850k	3.4%	Starting to get interesting
Strong small-unit deal	KRW 250m	KRW 800k	3.8%	Worth serious due diligence
Apparent bargain	KRW 200m	KRW 850k	5.1%	Attractive only after we find out why it is so cheap

So, is buying property to rent out in Busan still worth it?

Yes, selectively. Busan buy-to-let is still worth doing when we can buy below the local market, reach roughly 3.5% gross or better, and choose a location with several independent sources of tenant demand.

We would be much less enthusiastic about the average apartment.

The latest evidence has improved in some areas. Transaction activity is healthy enough that Busan no longer looks frozen. Several central districts are rising again. Rental contracts remain plentiful. International tourism is growing very quickly, foreign-resident numbers have increased over time, and the pace of domestic population outflow has recently eased.

Those positives do not erase the difficult numbers.

Financing still costs around 4.3% on average while many conventional apartments produce only 2%-3% gross. Busan has 8,379 unsold homes, including more than 3,200 completed units. The resident population continues to shrink and age. Price growth is concentrated rather than citywide.

For a landlord looking primarily for cash flow, we would skip premium Haeundae or Suyeong properties unless the purchase price is unusually favorable. Busanjin, Dongnae, Nam-gu and selected lower-priced locations give us more room to find a workable price-to-rent ratio.

We would also stop assuming that a low yield is acceptable because Busan property will inevitably appreciate. The current market gives us no reason to make that assumption.

A property producing 2% gross can still be a great purchase if we have found a mispriced redevelopment opportunity or an exceptional asset. But an ordinary 2% rental bought at full market value does not become attractive simply because it is located in Korea’s second-largest city.

We want the apartment where the seller has priced in too much pessimism, while tenants still have plenty of reasons to live there. That is where Busan buy-to-let still makes sense.

Who is the author of this content?

BAMBOOROUTES

A team specialized in real estate investing in APAC countries (Japan, Thailand, Indonesia, Australia, etc.).

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Busan. If you’d like to learn more about us, you can check our presentation page.