Warburg Pincus Enters Korean Senior Living in Partnership with SK Group

With South Korea set to become the world’s most aged society in the coming decades, Warburg Pincus is harnessing its experience managing residential investment platforms to launch a senior housing venture in Asia’s fifth largest economy as its first direct foray into the country’s living sector.

The US fund manager has tied up with SK D&D, a real estate development unit of Seoul-based conglomerate SK Group, and its asset management unit D&D Investment, in a partnership focused on acquiring and developing senior housing in the Greater Seoul area, according to an announcement from Warburg Pincus.

“We have built a high conviction that the senior housing market in South Korea presents tremendous opportunities, fueled by the shifting demographics and a growing aging population,” said Takashi Murata, managing director, co-head of Asia Real Estate and head of Japan for Warburg Pincus. “In 2024, South Korea has officially become a super-aged society, with individuals aged 65+ representing 20 percent of the population, amid a significant shortage in both the quantity and quality of senior housing options.”

The senior housing partnership is the latest Korean venture for Warburg Pincus, which has already established a footprint in the country’s logistics sector, and marks the most recent addition to its portfolio of living sector platform investments across Asia Pacific, including Weave Living and China’s Vlinker.

Trio of Seed Assets

The venture, which has yet to be named, aims to leverage Warburg Pincus’ global resources and experience in the living sector, together with SK D&D’s local presence and expertise in development and operations, to capture opportunities in South Korea’s emerging senior housing sector, according to the statement.

“We’re excited to embark on this journey with Warburg Pincus to capitalize on the growing demand for high-quality senior housing facilities in South Korea, said SK D&D chief executive Kim Do-hyun. He expressed confidence that the, “partnership is poised to create leading players in this emerging sector by addressing the evolving needs of the aging population through innovative and high-quality senior housing developments.”

The venture is seeded with three properties located in some of Seoul’s most developed districts, catering to the rapidly growing elderly population, including two assets already in operation which benefit from access to nearby hospitals and amenities.

The third project, located in the Bangbae-dong residential area of Seocho-gu in Seoul’s Gangnam area will be developed into a 12-storey assisted living facility spanning over 10,000 square metres (107,639 square feet).

Construction on the high-end project is scheduled to begin in early 2026, with completion targeted for 2028, according to the statement.

Aging Society

Warburg Pincus is investing in the senior living platform just less than one year after authorities in Seoul announced new measures to support expansion of housing for the country’s aging population, including promoting healthcare REITs and growing its Silver Stay initiative to promote private rental housing for seniors.

“Meanwhile, the South Korean government has proactively introduced supportive policies and measures to bolster the senior housing market in recent years, providing a significant tailwind to this nascent industry,” Murata said.

The Silver Stay programme provides low-cost financing for development of senior facilities as well as a 50 to 100 percent reduction in acquisition tax and a similar cut in property tax for projects qualifying under the initiatives, as well as further exemptions for small scale senior properties.

The policy support is aimed at resolving housing issues related to Korea’s rapidly aging society with the country last year qualifying as a “super-aged” society under UN guidelines as more than 20 percent of the population has reached at least 65 years of age, according to figures rom from Korea’s Ministry of the Interior and Safety.

Korea’s statistics agency calculates that the country will surpass Japan to become the world’s oldest society by 2067 due in part to a birth rate which has fallen to 0.78 per woman per the World Bank.

The senior living sector has also attracted other players with Seoul-based living sector management firm GH Partners announcing in February last year that it had teamed with US operator Thrive on a joint venture to offer management services in South Korea’s senior living sector.

In December 2023 Korean real estate fund manager Mastern Investment Management said it had partnered with local developer STS Development to raise at least $150 million from Asian investors for Korea’s first senior housing development fund.

Third Korea Venture

The partnership with SK D&D and D&D Investment marks the third venture in South Korea through the Warburg Pincus Asia Real Estate Fund, after the US giant had partnered with local player Wide Creek Asset Management for new economy real estate deals and following the establishment of its QUBE logistics joint venture.

Warburg Pincus rolled out its Qube Industrial platform in December 2023 through a partnership with Seoul-based third party logistics provider and warehouse developer MQ.

In addition to direct investments through its fund, Warburg Pincus has also gained exposure to the Korea market through its portfolio companies such as ESR, which in October last year raised $325 million for its first real estate fund dedicated to opportunities in the country.

In March of last year Weave Living, a rental housing investment and operating platform backed by Warburg Pincus, entered the Korean market through a venture with KKR.In addition to its involvement in Weave, Warburg Pincus has backed rental housing platforms in mainland China, including Vlinker, a Shanghai-based investor and operator which has a portfolio of more than 40,000 units either completed or under development in China’s commercial capital.