Friday, August 9th, 2013
SEOUL, KOREA- Korea has quickly emerged as a big investor in the world's real estate market. According to Jones Lang LaSalle Inc., a professional services and investment management company specializing in real estate, in its latest report, Korea was ranked No. 2 at US$5.4 billion in the first half of this year in terms of overseas real estate investment after the United States. This is almost triple that for the whole year of 2012 and the largest ever since 2006 when the real estate consultancy began collecting data.
Korea's commercial property investment overseas focused mostly on high-rise buildings in industrialized countries. For example, as much as 39 percent of Korean investment funds in the first six months of this year went to the United States. In the second quarter, the National Pension Service bought BG Group Place, the 46-story building in Downtown Houston, Texas, jointly with U.S. Investco Financial Corp. at $480 million. Mirae Asset Global Investments, meanwhile, splurged on $218 million to acquire the 31-story 225 West Wacker Drive building in Chicago.
The biggest reason Korean institutional investors are moving aggressively in an overseas property shopping spree has to do with years of the low-interest regime. As the interest rate remains at extremely low levels largely due to quantitative easing stance of major national monetary authorities, pension funds and financial institutions have turned to overseas real estate markets that offer potentially higher returns.