CPPIB and MGRV to Develop Korea’s Rental Housing Projects

Rental housing sector is gaining ground in Korea with Canada Pension Plan Investment Board (CPPIB) and MGRV, a leading Korean rental housing provider, announcing a $348.81 million joint venture (JV) to develop rental housing projects in Korea.

With CPP Investments committing $92.78 million to the JV’s seed projects located within Seoul, it will hold 95% of the venture and MGRV will own the remaining 5%. The JV is CPP Investments’ first direct investment in the residential sector in Korea, aims to develop properties in key corridors of Seoul, close to major business districts and leading universities.

Sophie van Oosterom, Managing Director, Head of Real Estate at CPP Investments, said that this JV offers an excellent opportunity to enter the residential sector in Korea and meet the strong demand for high-quality rental housing in the greater Seoul area where half of Korea’s population resides.

“We are pleased to work alongside an experienced local partner like MGRV to enter this market segment, which we believe can generate attractive long-term returns for the CPP Fund,” Oosterom added.

MGRV CEO Cho Kang-tae said that this partnership marks a significant step in demonstrating the high growth potential of the Korean rental housing market and MGRV’s competitive operational capabilities on a global scale.

“We will continue to drive the ecosystem innovation in the market by expanding community-centered properties,” Kang-tae added.

CPP Investments’ entering the rental housing market comes as Korea seeks to ease constraints on commercial operators with measures announced by the government in August last year, according to a Savills report.

The government’s plan calls for relaxing some of the main restrictions, including rent control and high corporate tax rates, while offering benefits like lower acquisition and property taxes.

It may be recalled that the Hong Kong-based operator Weave Living having teamed with private equity major KKR last year on a rental housing platform focused on the Korean capital.

The partners have acquired two assets under their JV – the State Sunyu hotel near Seoul’s Yeoido business district, repositioned as the 157-unit Weave Suites Sunyu Parkside, and the UnivM officetel building in Dongdaemun district, reworked as the 98-unit Weave Place Hoegi.

CPP Investments manages the fund in the interest of the more than 22 million contributors and beneficiaries of the Canada Pension Plan. In order to build diversified portfolios of assets, investments are made around the world in public equities, private equities, real estate, infrastructure and fixed income.

Headquartered in Toronto, with offices in Hong Kong, London, Mumbai, New York City, San Francisco, São Paulo and Sydney, CPP Investments is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. At September 30, 2024, the Fund totalled $471.26 billion.

About MGRV

MGRV is a fully integrated residential platform in Korea, capable of sourcing, developing and operating ‘for-rent’ residential projects.

Through its New Living Community brand, Mangrove, which proposes a new way of living, MGRV provides flexible and innovative forms of co-living and accommodation spaces that foster a sense of community.

Currently, MGRV operates six branches (with a capacity of 1,200 people) in Korea and is expanding its business portfolio targeting new audiences and regions. MGRV is leading innovation in the residential industry ecosystem, shifting from a supply-driven to a customer-focused approach.