Korea emerges as major real estate investor in Asia

13-Nov-2019 Intellasia | KoreaTimes | 6:02 AM Print This Post

Korea has been emerging as major real estate investors in the Asia-Pacific with the country ranking top in alternative real estate investment in the region among members of other Asian nations as of September, data showed Tuesday.

This is due to a mixture of government regulations to crack down on property speculation amid falling interest rates.

According to data from the Korea Institute of Finance (KIF) and CBRE, a global real estate services and investment firm, Koreans’ investment in real estate in the Asia-Pacific region through alternative investment funds accounted for 35 percent of the total made by Asians.

The figure for Korea was the highest, followed by Singapore (29 percent), Hong Kong (14 percent) and Japan (10 percent).

In 2017, China was the biggest investor accounting for 55 percent, followed by Singapore (17 percent), Hong Kong (14 percent) and Korea (6 percent).

With a surge in Koreans’ investment in real estate in the region, the KIF has warned against growing risk involving falling returns induced by heated competition.

The return on investment of office buildings overseas fell to 4 percent in September 2019, from around 7 percent in 2010.

KIF researcher Shyn Yong-sang has called for strengthened monitoring and risk management on alternative real estate investments.

“People invested in real-estate overseas may face elevated risk of not being able to cash in on their initial investment as quickly as they want, a common occurrence among those who made investments via private equity funds,” Shyn said.

“The development of a profitability valuation index should precede regular or needs-based on-site inspections for accurate risk assessment.”

The remarks come amid a rapid increase in the amount of alternative investment funds involving overseas real estate and other assets.

Korea Financial Investment Association (KOFIA) data showed the overseas real-estate funds stood at 50.7 trillion won ($43.5 billion) as of September 2019, nearly four times the 12.3 trillion won in 2015.

The increase is in line with global investment sentiment favouring the relatively high-yielding product.

According to Real Capital Analytics, a data and analytics firm with research work focused on the commercial real estate investment market, real-estate-related global alternative investment spike to $1,746 trillion, a four-fold increase from $446 trillion in 2009.



Category: Korea

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