Global asset manager sees growing opportunity as Korea shifts away from lump-sum jeonse leases Louise Kavanagh, chief investment officer and head of Asia Pacific at Nuveen (Nuveen) Foreign institutional investors are increasingly eyeing Seoul’s nascent rental housing market, betting that demographic shifts, rising numbers of single-person households and growing foreign demand will accelerate Korea’s transition away from the traditional "jeonse" system, according to Nuveen.“The vast majority of Seoul’s rental housing stock is still owned by private individuals, with only a small share professionally managed,” Louise Kavanagh, chief investment officer and head of Asia Pacific at Nuveen, told The Korea Herald in an email interview.“That creates significant room for institutional investors to enter the market and provide professionally managed rental housing, particularly for younger renters.”Nuveen recently partnered with rental housing operator Weave Living to redevelop a 22.5 billion won ($15 million) property in central Seoul into a serviced apartment under the Weave Suites brand, scheduled to open in January 2027.The project marks Nuveen’s first residential investment in Korea since entering the market in 2019. Until now, the firm had focused primarily on offices and logistics assets.Nuveen, the investment arm of Teachers Insurance and Annuity Association of America, manages roughly $1.3 trillion in assets. Its assets under management are expected to rise to $2.5 trillion following its planned acquisition of Schroders.Kavanagh said Korea’s residential lease market is undergoing a structural shift from jeonse — Korea's the lump-sum deposit-based 2-year lease system — toward monthly rent arrangements.Under jeonse, tenants typically pay a large refundable deposit instead of monthly rent and receive the money back at the end of a two-year contract.“Renters are increasingly recognizing the value proposition of institutional rental housing,” Kavanagh said, citing greater lease flexibility, stronger tenant protections and improved living quality. Nuveen-owned property in central Seoul set to be converted into Weave Living’s serviced apartment brand Weave Suites (Nuveen) She added that foreign demand was becoming an increasingly important driver.“Many foreign tenants cannot easily provide the large upfront deposits required under the jeonse system, so demand for monthly rental housing with flexible lease terms is rising,” she said.The trend is drawing broader attention from global investors. Offshore firms including Morgan Stanley and Hines have also shown interest in Seoul’s residential rental market through local development projects.Still, Kavanagh warned that regulatory risks remain a major hurdle.Under housing stabilization measures introduced in October, all of Seoul was designated an adjustment area, limiting comprehensive real estate tax exemptions for rental housing operators.While the measures were intended to curb speculation, Kavanagh said the tax burden could materially weaken returns and discourage institutional rental supply.“With rent increases capped at 5 percent, even moderate tax increases can significantly pressure profitability,” she said.Despite that, Kavanagh said Seoul’s long-term fundamentals remain attractive.“The core drivers are still intact,” she said. “Seoul continues to face a shortage of professionally managed monthly rental housing capable of meeting growing demand from younger renters and single-person households.”