Korean institutional investors such as pension funds and insurers are increasing their investment in overseas real estate properties to an unprecedented level. As of the end of last month, the amount added up to 923.5 billion won (US$823.7 million), which was equivalent to 49.7 percent of their total real estate investment.
Back in 2004, when the first real estate fund in Korea appeared, overseas investment stood at 3.5 billion won (US$3.1 million), or 0.3 percent of the total. Then, it continued to go up and reached 1.3308 trillion won (US$1.1870 billion), or 28.5 percent of the total, in 2007. The financial crisis of 2008, however, affected the investment, and the percentage dropped to 7.4 percent in 2010. After the crisis, advanced economies’ real estate markets recovered and Korean pension funds, insurers, and benefit societies raised the ratio to 34.4 percent in 2013 and 40.0 percent last year.
The number of investment projects itself is on the rise, too. In 2010, only nine out of 102 real estate funds were for overseas investment. However, the number and the ratio rose to 16 and 12.9 percent in 2012, 45 and 25.3 percent in 2013, and 22 and 26.5 percent in the first half of this year. The ratio is estimated to exceed 50 percent before the end of this year.