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SUMMARY
Daegu currently gives investors roughly 3% to 4% gross on ordinary apartments, around 4% to 5% on stronger small units, and about 7% on officetels under the Korea Real Estate Board’s deposit-adjusted income-return calculation.
The biggest divide is not really between neighborhoods but between property types and unit sizes. Compact apartments consistently produce more income per won invested than large family apartments, while officetels sit in a separate, higher-yield category.
Around 4% gross is a useful target for a conventional Daegu apartment today. Once the number reaches roughly 4.5%, it starts to look strong; close to 5% is possible, but usually only in cheaper small-unit markets where the building and tenant demand need extra scrutiny.
Suseong-gu shows why prestigious locations can be poor income investments. Buyers pay heavily for schools, reputation and resale depth, but monthly rents do not rise enough to keep pace with those purchase-price premiums.
Daegu’s better yields are not being driven by a rent boom. They are partly the result of apartment prices staying soft, which raises the yield mechanically when rents hold up better than sale prices.
The city still has a meaningful supply overhang, with more than 4,000 unsold homes, but the future pipeline has collapsed. New presales have stalled and housing starts have fallen dramatically, reducing the risk of another large wave of supply several years from now.
Population decline remains a genuine long-term risk, yet household formation is moving in a more favorable direction for small rentals. One- and two-person households now dominate the city’s household structure, which helps explain why compact housing can still have a credible tenant base even as the total population shrinks.
Students, young workers and renters around transport hubs are the clearest demand base for the small units that produce Daegu’s best conventional yields. A modest 4.3% property in the right micro-location can be better than a nominal 5% property with weak occupancy or constant tenant turnover.
Financing changes the picture quickly. A 4% gross apartment can be workable for a cash buyer, but mortgage costs around the same level can absorb most of the rental income before vacancy, repairs, brokerage and taxes are counted.
Officetels deserve attention because the official Daegu income return sits above 7%, but that figure should not be compared mechanically with apartment gross yield. The calculation uses net invested capital after the tenant deposit, and officetels generally bring more turnover risk and a weaker resale story.
Daegu is therefore more compelling as an income market than as a pure capital-growth story right now. We would favor small, well-located units bought at disciplined prices, use roughly 4% to 4.5% gross as the conventional apartment target, and demand a clear reason before accepting anything below 3%.
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What rental yield can you get in Daegu now?
What rental yield can you realistically get in Daegu now?
For a normal Daegu apartment today, we would expect roughly 3% to 4% gross, with some small units reaching 4% to 5%; officetels can show returns above 7%, although that figure is calculated differently.
That range is wide because Daegu contains several rental markets at once. In the neighborhood-level apartment sample we reviewed, modeled one-bedroom yields averaged about 4.0%, compared with 3.2% for two-bedrooms and just under 3.0% for three-bedrooms.
The median figures were close to those averages, so a few unusually cheap properties were not distorting the result. Small apartments clustered around 4%, while large family apartments often fell toward 2.5% to 3%.
At the top end of the apartment sample, a small unit in Pyeongni-dong came close to 4.8% gross. At the other extreme, a large Beomeo-dong apartment was around 2.3%.
Daegu officetels sit in a different category. Korea Real Estate Board data available through KOSIS put the city’s officetel income return at about 7.18%. The Board calculates that return against the purchase price after subtracting the tenant’s monthly-rent deposit, so it should not be compared blindly with a simple apartment gross yield.
For a conventional Daegu apartment, 3% to 4% is the useful benchmark today. Once we get beyond roughly 4.5%, the property deserves a closer look.
| Daegu property | Current yield range | What we would expect |
|---|---|---|
| Small apartment | ~4.0%–4.8% gross | Strongest conventional segment |
| Two-bedroom apartment | ~3.0%–3.7% gross | Middle of the market |
| Large family apartment | ~2.3%–3.3% gross | Usually weak for pure income |
| Officetel | ~7.2% official income return | Higher income, different calculation and risk |
Why do Daegu rental yields vary so much?
Daegu rental yields vary sharply because buyers pay very different premiums for small income properties, family apartments and prestigious neighborhoods.
A large apartment in Suseong-gu can be expensive because families value schools, neighborhood reputation, building quality and long-term ownership. Monthly rent usually does not rise enough to match that purchase-price premium.
Small units work differently. A tenant looking near a university, station or employment area cares much more about monthly housing cost and convenience. The purchase price per property can also be dramatically lower, which pushes the yield higher.
Korea’s deposit-heavy rental system adds another layer. A jeonse tenant provides a large refundable deposit with little or no monthly rent, while a wolse tenant pays monthly rent alongside a smaller deposit. Two similar Daegu apartments can therefore produce very different visible cash flows.
A citywide yield average only gets us so far. For any real property, we need to know the purchase price, tenant deposit, monthly rent, property type and local tenant market.
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Do small apartments give the best rental yields in Daegu?
Yes, small Daegu apartments currently beat larger apartments quite consistently on rental yield.
Across the neighborhood sample we reviewed, one-bedroom apartments averaged roughly 4.0% gross. Two-bedroom units came in near 3.2%, and three-bedroom apartments averaged about 3.0%.
The pattern also appeared inside individual neighborhoods. In Pyeongni-dong, a modeled one-bedroom priced around ₩105 million and renting for roughly ₩420,000 a month produced a yield close to 4.8%. A three-bedroom in the same area cost almost three times as much, while monthly rent did not come close to tripling.
Daemyeong-dong followed a similar pattern, with the modeled yield dropping from roughly 4.6% on a one-bedroom to around 3.3% on a three-bedroom.
Beomeo-dong was even more extreme. The modeled one-bedroom yield was below 3%, while a large three-bedroom came in around 2.3%.
We found the same direction across every neighborhood in the sample: as unit size increased, rental yield fell. For someone buying Daegu primarily for cash flow, that pattern is hard to ignore.
| Apartment size | Average gross yield | Median gross yield | Modeled net yield |
|---|---|---|---|
| 1 bedroom | 4.00% | 4.20% | 3.02% |
| 2 bedrooms | 3.22% | 3.40% | 2.25% |
| 3 bedrooms | 2.95% | 3.10% | 1.97% |
Where in Daegu can you get close to a 5% apartment yield?
The clearest route toward a 5% Daegu apartment yield is currently a small, relatively inexpensive unit outside the city’s prestige districts.
Pyeongni-dong was the strongest example in the sample we reviewed. A one-bedroom at roughly ₩105 million with monthly rent near ₩420,000 produced about 4.8% gross.
Daemyeong-dong followed at around 4.6%. Chimsan-dong was close to 4.4%, while modeled small-unit yields around Dongcheon-dong, Sangin-dong and Sincheon-dong sat near 4.3%.
These areas are interesting because the rent does not need to be spectacular. A ₩420,000 monthly rent produces more than ₩5 million a year, which already becomes a meaningful return when the property costs barely above ₩100 million.
The trade-off is easy to miss when chasing yield. Cheap buildings can come with weaker resale demand, more maintenance, older interiors or a thinner tenant pool. A 4.7% property with frequent turnover can easily produce less cash than a solid 4.2% unit that stays occupied.
We would treat roughly 4.5% on a normal apartment as genuinely strong in Daegu today. A number approaching 5% is attractive enough that we would immediately check what explains the discount.
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Does expensive Suseong-gu give you a good rental yield?
No, Suseong-gu is currently one of the weaker places in Daegu if rental income is the main goal.
Beomeo-dong, Manchon-dong and Hwanggeum-dong command some of Daegu’s highest residential prices. Families pay for schools, established neighborhoods and long-term desirability, yet landlords cannot charge proportionately higher monthly rents.
The difference is large. In the sample we reviewed, a modeled Beomeo-dong one-bedroom cost around ₩260 million and rented for approximately ₩620,000 a month, giving a gross yield below 3%.
A Pyeongni-dong one-bedroom was priced around ₩105 million and rented for roughly ₩420,000. The tenant paid only about one-third less rent, while the investor paid about 60% less for the property. That pushed the yield close to 4.8%.
Large apartments amplify the gap. A modeled Beomeo-dong three-bedroom around ₩900 million generated annual rent of roughly ₩21 million, or only about 2.3% gross.
Suseong-gu still has a case for buyers who care about resale depth, owner-occupier demand and long-term capital appreciation. As an income investment, though, the numbers are hard to get excited about.
| Neighborhood | Example unit | Purchase price | Monthly rent | Gross yield |
|---|---|---|---|---|
| Beomeo-dong | 1 bedroom | ~₩260m | ~₩620k | ~2.9% |
| Manchon-dong | 1 bedroom | ~₩240m | ~₩610k | ~3.1% |
| Hwanggeum-dong | 1 bedroom | ~₩220m | ~₩600k | ~3.3% |
| Pyeongni-dong | 1 bedroom | ~₩105m | ~₩420k | ~4.8% |
| Daemyeong-dong | 1 bedroom | ~₩125m | ~₩480k | ~4.6% |
Are Daegu officetels really yielding more than 7% now?
Yes, Daegu officetels currently show an official income return of about 7.18%, making them much more interesting for cash flow than most conventional apartments.
Korea Real Estate Board figures available through KOSIS place Daegu below Daejeon at 8.76%, Gwangju at 7.72% and Incheon at 7.56%, while Daegu remains above the roughly 6.87% figure for non-capital regions overall.
There is one important technical detail. The Board defines officetel income return as annual monthly rent divided by net invested capital, meaning the purchase price minus the tenant’s monthly-rent deposit. A 7.18% official officetel return is therefore not exactly equivalent to dividing annual rent by the full property price.
Even after allowing for that difference, Daegu officetels clearly offer more income than mainstream apartments. A small apartment around 4% and an officetel above 7% occupy very different parts of the local market.
The extra return comes with extra headaches. Officetels can face more tenant turnover, tougher competition between nearly identical units, weaker resale demand and less capital appreciation than family apartments.
Still, a yield above 7% is high enough that we would take Daegu officetels seriously today rather than dismissing them as a niche product.
| Officetel market | Official income return |
|---|---|
| Daejeon | 8.76% |
| Gwangju | 7.72% |
| Incheon | 7.56% |
| Daegu | 7.18% |
| Sejong | 6.98% |
| Non-capital regions | 6.87% |
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Is a 7% Daegu officetel actually better than a 4% apartment?
A 7% Daegu officetel can be the better income investment, but the gap needs to survive vacancy, expenses and weaker resale performance.
Imagine two properties requiring similar capital. One produces a return around 7%, while the apartment sits around 4%. A three-percentage-point gap is large enough to matter every year.
That advantage shrinks quickly if the officetel turns tenants over frequently. Two vacant months remove one-sixth of the annual rent. Brokerage, cleaning, repairs and incentives can then cut the return further.
Resale is the other big unknown. Korean apartments have historically attracted a much broader owner-occupier market than officetels. If a normal apartment appreciates while the officetel stays flat or falls, several years of extra rental income can disappear in the eventual sale.
We would choose the officetel when the building has proven occupancy, competitive management costs and enough local tenant demand to support that higher return. Buying one simply because the yield column says 7% would be too easy.
How much of a Daegu rental yield do you actually keep?
A Daegu apartment showing 4% gross will often leave something closer to 3% after normal property-level friction, before financing and personal taxes.
The modeled neighborhood data give us a useful idea of the gap. One-bedroom apartments averaged roughly 4.0% gross and about 3.0% net. Two-bedroom units fell from about 3.2% gross to roughly 2.3% net, while three-bedroom apartments moved from just under 3.0% to around 2.0%.
A single empty month already cuts annual rent by 8.3%. For a ₩150 million apartment renting at ₩500,000 a month, full occupancy gives ₩6 million a year and a 4% gross yield. One vacant month drops that to about 3.67%; two vacant months bring it down to roughly 3.33% before any other cost.
Repairs, landlord-paid expenses, brokerage between tenants and taxes push the result lower again.
Low-yield apartments leave almost no cushion. A prestige property starting around 2.5% gross can quickly become a 1% to 2% net-income asset. At that point, the owner needs capital appreciation to carry most of the investment case.
That is why the difference between 3% and 4.5% matters more than the headline numbers first suggest. After costs, the stronger property can generate twice as much usable income.
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Does Korea’s jeonse system distort Daegu rental-yield comparisons?
Yes, Korea’s jeonse and deposit-heavy rental contracts make Daegu yields harder to compare than yields in a conventional monthly-rent market.
With jeonse, a tenant provides the landlord with a large refundable deposit and pays little or no monthly rent. Wolse contracts combine a smaller deposit with monthly rent, while semi-jeonse sits somewhere between the two.
Korea Real Estate Board measures the conversion between these structures using annual monthly rent divided by the gap between the jeonse deposit and the monthly-rent deposit.
For investors, the practical issue is straightforward. A landlord receiving a large deposit has access to a substantial amount of tenant capital, even when monthly rent looks low.
Suppose a ₩300 million apartment comes with a ₩100 million deposit and ₩700,000 monthly rent. Annual rent is ₩8.4 million, which equals 2.8% of the full property price. Relative to the owner’s ₩200 million of capital remaining in the property after receiving the deposit, that cash rent equals 4.2%.
We still owe the tenant the ₩100 million deposit, so treating 4.2% as a clean unleveraged property yield would exaggerate the return. The deposit behaves much more like refundable financing.
Whenever we compare Daegu properties, we therefore want both numbers: the return on the full property value and the cash return after accounting for the tenant deposit.
Are Daegu rental yields rising because rents are booming?
No, today’s more attractive Daegu yields are being helped heavily by weak purchase prices rather than an exceptional surge in rent.
The latest Korea Real Estate Board weekly release showed Daegu apartment prices rising 0.01% from the previous week after falling 0.01% the week before. That tiny move may eventually prove to be a turning point, but the bigger picture is still soft: prices remain down 0.87% since the start of the year.
Seoul was up 7.56% over the same period. That contrast tells us far more than the latest one-week Daegu increase.
When property prices fall and rent holds up better, rental yields rise automatically. An apartment collecting ₩10 million a year produces 3.33% at a ₩300 million purchase price. If the same apartment falls to ₩270 million while rent stays unchanged, the yield jumps to 3.70%.
Daegu has benefited from that denominator effect.
So we should be careful with the story behind today’s yields. The city has become more attractive for income buyers partly because apartment owners have already absorbed a substantial property-market correction.
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Is Daegu still dealing with too many apartments?
Yes, Daegu still has a meaningful housing overhang, although the new supply pipeline is now shrinking at an extraordinary pace.
The latest Ministry of Land housing statistics counted 4,278 unsold homes in Daegu. That was 105 fewer than the previous month, so the backlog is moving in the right direction, but more than 4,000 unsold units still give buyers plenty of choice.
The fresher supply numbers are much more dramatic. Daegu recorded zero new apartment presales in the latest reported month, while housing starts collapsed to only 17 units, down 95.7% from a year earlier.
That slowdown follows several years of heavy deliveries. At the peak of the recent cycle, some quarters brought more than 8,000 or 9,000 completed homes onto the market. Those completions helped drive the prolonged pressure on Daegu apartment prices.
The city still carries the consequences of that oversupply today. What has changed is the pipeline behind it. Developers are barely starting anything.
For rental investors, that mix is interesting: excess inventory has already hurt prices, while the mechanism that created the excess is rapidly disappearing.
| Daegu housing indicator | Latest reading | What it tells us |
|---|---|---|
| Unsold homes | 4,278 | Existing overhang remains |
| Change in unsold homes | -105 in latest month | Inventory is slowly clearing |
| New apartment presales | 0 | New launches have stalled |
| Housing starts | 17 | Future pipeline has collapsed |
| Annual change in starts | -95.7% | Supply contraction is extreme |
Could Daegu’s collapsing construction pipeline push rents higher?
Daegu’s collapsing housing pipeline should support the rental market eventually, although we would not expect an immediate rent spike.
A development slowdown takes time to reach the finished-housing market. The apartments that tenants can rent today were planned and built years ago, so the city still has to work through existing unsold homes and recently completed projects.
The interesting part comes later. If starts remain anywhere near today’s depressed levels, Daegu will deliver far fewer homes several years from now.
That does not guarantee higher yields. Suppose a ₩300 million apartment rents for ₩1 million a month, giving a 4% gross yield. A 5% rent increase lifts the yield to 4.2%. But if buyers anticipate tighter supply and push the apartment price up 10% to ₩330 million, the yield falls to about 3.8%.
Improving housing fundamentals can therefore help the owner without improving the entry yield for the next buyer.
For someone buying now, we see Daegu’s collapsing construction pipeline mainly as protection against another huge supply shock. A future jump to 6% conventional apartment yields would require a much stronger rental move than the current evidence supports.
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Does Daegu’s shrinking population make rental property too risky?
Daegu’s population decline is a real long-term problem, but smaller household sizes are keeping demand for compact housing much healthier than the headline population number suggests.
Daegu has roughly 2.35 million registered residents, and the city lost around 10,600 people over the previous year. A decline of roughly 0.4% is clearly not a bullish demographic backdrop.
Household formation tells a different story. Daegu had about 1.11 million households at year-end, roughly 8,400 more than one year earlier. Average household size slipped from around 2.14 people to 2.12.
One- and two-person households now account for roughly two-thirds of all households.
Those numbers help explain why a shrinking city can still need more small homes. When a three-person household becomes two separate households, population does not increase, but the number of homes required can.
For Daegu landlords, this demographic split favors studios, officetels and smaller apartments much more than large family rental units.
We would still price population decline into any long-term investment here. The data simply show that “Daegu is shrinking, therefore rental demand is shrinking at the same speed” is too crude.
Who actually rents the small apartments that produce Daegu’s best yields?
Daegu’s stronger small-unit yields are supported mainly by students, young workers and one-person households around universities, transport hubs and employment areas.
Kyungpook National University alone has more than 34,000 students, including roughly 28,000 undergraduates and more than 6,000 graduate students. Keimyung University and other institutions add another large pool of young renters.
Dongdaegu creates a different kind of demand. As the city’s main intercity rail and transport hub, it supports renters who value mobility more than school districts or large living space.
These renter groups fit the broader household trend. Around two-thirds of Daegu households consist of one or two people, giving compact housing a much larger structural market than the population decline alone would suggest.
Location still decides whether a particular building works. A studio five minutes from a university or major station can have a very different occupancy profile from an almost identical unit in an inconvenient residential pocket.
We would rather buy a 4.3% small apartment with obvious local demand than stretch for 5% in a building where the tenant story is unclear.
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Can you still make money with a mortgage on a Daegu rental?
A mortgage makes low-yield Daegu apartments difficult to justify today because borrowing costs can absorb most of the rental return.
Korean mortgage rates remain around levels that can exceed the gross yield on many Daegu apartments. Once borrowing costs are around the 4% area, a property yielding 2.5% or 3% has almost no chance of producing attractive leveraged rental cash flow.
Take a ₩300 million apartment yielding 4% gross. Annual rent is ₩12 million. If the buyer borrows ₩150 million at 4.5%, annual interest alone comes to ₩6.75 million.
More than half the gross rent disappears before vacancy, repairs, brokerage, taxes or other ownership costs.
A 2.5% Suseong-gu apartment looks even weaker with debt. The investor is effectively accepting negative rental leverage and relying on future price appreciation to make the purchase worthwhile.
Higher-yielding officetels have more room. A return above 7% creates a much wider spread over financing costs, although tenant turnover and weaker capital growth still need to be priced in.
For leveraged buyers, our hurdle rate would therefore be higher than for cash buyers. A 4% gross apartment may be acceptable without debt; with expensive financing, it is much less convincing.
Is Daegu better than Seoul for rental yield right now?
Yes, Daegu is currently the more attractive of the two cities for rental income per won invested, while Seoul remains far stronger for price momentum and resale depth.
Daegu buyers pay dramatically less for property, and local rents have not fallen in proportion to the price gap. That creates more room for conventional apartment yields around 3% to 4% and higher returns on smaller properties.
Recent price trends make the contrast especially clear. Daegu apartment prices remain down 0.87% since the start of the year even after the latest 0.01% weekly increase. Seoul has risen about 7.56% over the same period.
That divergence tells us what each market is currently pricing. Seoul investors are willing to accept lower rental income because they expect scarcity, stronger capital growth and deep buyer demand. Daegu investors demand more income because the city carries more demographic, supply and resale risk.
For someone whose priority is monthly cash flow, we would look at Daegu first. For someone primarily chasing long-term capital appreciation, the case becomes much less obvious.
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What rental yield should make a Daegu apartment worth buying?
For a conventional Daegu apartment today, roughly 4% gross gets our attention, 4.5% looks genuinely attractive, and anything below 3% needs a strong capital-growth reason.
Those thresholds match the market we actually see.
A yield near 4% sits around the average of the small apartments in our neighborhood sample, so reaching it does not require finding an extreme bargain.
Once we get above 4.5%, the property moves toward the best conventional examples we found, including Pyeongni-dong near 4.8% and Daemyeong-dong around 4.6%.
Below 3%, the investment changes character. Prestige locations such as Beomeo-dong can fall into this range because the purchase price includes factors that tenants do not fully pay for through rent. At those yields, we are buying largely for future resale value rather than current income.
For officetels, we would demand more because Daegu’s official benchmark is already above 7%. A 5% officetel would look mediocre in a market where competing properties can deliver substantially more.
Property type should therefore set the hurdle. Calling 5% “good” without saying what we are buying hides too much.
So what rental yield can you actually get in Daegu now?
Daegu currently gives investors a realistic 3% to 4% gross yield on ordinary apartments, around 4% to 5% on the better small units, and roughly 7% on officetels under the Korea Real Estate Board’s net-investment calculation.
For a normal apartment, we would target at least 4% gross today. Around 4.5% starts to look strong, while close to 5% is possible in cheaper small-unit markets if the building and tenant demand hold up.
Large apartments in expensive areas such as Suseong-gu are much harder to defend for income alone. Gross yields around 2% to 3% leave very little after vacancy and ownership costs.
Officetels offer the biggest cash-flow numbers, with Daegu around 7.18% in the latest official dataset we reviewed. That return comes with more turnover risk, a different deposit-adjusted calculation and usually a weaker resale story than mainstream apartments.
The timing is more interesting than it was a few years ago. Daegu apartment prices remain down for the year, more than 4,000 unsold homes are still hanging over the market, yet new presales have effectively stopped and housing starts have collapsed by more than 95% year-on-year in the latest Ministry of Land release.
That leaves us with a clear view. Daegu is currently a credible Korean rental-income market for investors who buy small and stay disciplined on price. Around 4% to 4.5% gross is the sensible target for a conventional apartment. Close to 5% is strong. Officetels can go materially higher. Once the apartment yield falls below 3%, we would want a very good reason to buy it as a rental.
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OUR METHODOLOGY
This analysis tests what rental yield an investor can realistically get in Daegu now by looking beyond a single citywide average. We compare apartment and officetel returns with unit size, neighborhood pricing, current market direction, supply, demographics, tenant demand and financing conditions.
For conventional apartments, we normalized neighborhood-level sale-price and monthly-rent observations into a common gross-yield framework, then compared averages, medians and the spread between smaller and larger units. The point was to see what the market itself treats as ordinary, strong or unusually high rather than impose a preset threshold.
Officetels were treated separately because the Korea Real Estate Board uses a different return calculation. Its income return is based on annual monthly rent relative to net invested capital after subtracting the tenant’s monthly-rent deposit, so we did not present the official officetel figure as directly interchangeable with a simple apartment gross yield.
We also separated headline yield from what an investor may actually keep. Vacancy, landlord-paid costs, repairs, tenant turnover, deposits and financing were used to test how quickly an apparently attractive gross return can shrink in practice.
Market context was assessed independently from current rent. Korea Real Estate Board price data were used to judge Daegu’s recent apartment-price direction, while Ministry of Land, Infrastructure and Transport housing statistics were used to track unsold inventory, presales, housing starts and the future supply pipeline.
Demographic and tenant-demand checks came from official resident and household statistics, Daegu Metropolitan City data, and university enrollment figures. This lets us separate the city’s headline population decline from the continued growth and importance of one- and two-person households and the local renter base around universities and transport hubs.
Financing conditions were checked against Bank of Korea interest-rate data because leverage can change the investment case completely when mortgage costs approach or exceed the property’s gross yield.
Key sources used for this analysis include: MOLIT’s Real Transaction Price Disclosure System, Korea Real Estate Board’s Nationwide Housing Price Trends Survey, the August 31 weekly apartment-price release, the preceding August 24 weekly release, Korea Real Estate Board’s Officetel Price Trends methodology, the Q2 2026 officetel release, MOLIT’s July 2026 Housing Statistics, MOLIT’s June 2026 Housing Statistics, Ministry of the Interior and Safety resident population and household statistics, households by household size, Daegu Metropolitan City Statistics, Kyungpook National University statistics, Keimyung University statistics, and Bank of Korea economic statistics.
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