Return on real estate investments quadruple of deposit rates in Q3

SEOUL, Dec. 30 (Yonhap) -- The return on real estate investments in South Korea was more than four times higher than interest rates on bank deposits in the third quarter, central bank data showed Saturday, partly offering a reason for a recent boost in property sales here.

Returns from investment in commercial and office buildings were 6.4 percent and 6.1 percent, respectively, in the July-September period, far surpassing the 1.5 percent interest rate on fixed deposits over the period, according to the data compiled by the Bank of Korea (BOK).

More investors turned to real estate for higher returns as the BOK held the key rate at a record low of 1.25 percent since June 2016, below the inflation rate at 1.9 percent this year. The central bank raised the base rate by a quarter percentage point to 1.50 percent in late November.

The trading volume of commercial properties in the first nine months of this year came to 282,000 units, up more than 50 percent from a year earlier, it noted.

"The turnover of commercial and office buildings has rapidly risen this year, especially in the Seoul and metropolitan area, as yield on real estate investments continued to surpass the deposit interest rates and the government tightened regulations on houses," the BOK said in a report.

ejkim@yna.co.kr
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