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Korean institutions bought W8 tln of offshore properties in 2015

All News 11:39 June 14, 2016

SEOUL, June 14 (Yonhap) -- South Korean institutions invested more than 8 trillion won (US$6.8 billion) in overseas properties last year as they sought stable investment gains away from low growth and rates at home, a global real estate consultancy said Tuesday.

In 2015, institutional investors spent a combined 8.27 trillion won on stakes in real estate outside the country, up sharply from 327.6 billion won in 2007, according to CBRE Korea, the Korean operations of Los Angeles real estate services firm CBRE Group Inc.

"Institutional investors such as the National Pension Service (NPS) and asset management companies increasingly prefer overseas properties to traditional assets such as equities and bonds for stable returns," Kim Young-min, a manager at the Korea Financial Investment Association (KOFIA) said.

Given the country's economic growth remains weak and its key policy rate stands at an all-time low of 1.25 percent, their interest in overseas alternative assets will grow further, the KOFIA manager said.

Korea's economy grew 2.6 percent last year, down from the previous year's 3.3 percent growth.

Among local institutions, the national pension fund NPS stood out with its sharply increased investment in overseas assets over the past five years.

To bolster returns, the world's third-largest state fund with assets of more than 520 trillion won spent a total of 33.9 trillion won on overseas alternative investments from 2011 to March this year, with property accounting for 16.4 trillion won, or 48.4 percent, of the total.

Overseas assets consist of alternative assets as well as equities and bonds. Alternative assets include real estate and infrastructure projects to build roads, bridges and ports, for instance. They do not include traditional assets such as stocks and bonds.

Mirae Asset Financial Group has also been aggressive by investing 4.5 trillion won since 2006 in diversifying its assets overseas. It has invested in overseas buildings and hotels to secure a variety of growth drivers while focusing on its mainstay asset management business.


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