Korean investors consider buying more real estate in 2021

South Korean investors are willing to acquire more real estate assets this year than last year, as the market shows signs of recovery from the coronavirus pandemic with the expansion of vaccination programs, according to a report released by global commercial real estate services firm CBRE on Tuesday.

A survey of 492 investors in the Asia-Pacific region, including 40 from Korea, showed that 53 percent of Korean investors said they would purchase more real estate this year than in 2020. The figure is slightly below the regional average of 59 percent. The survey conducted between Nov. 9 and Dec. 14, covers a range of topics, including buying appetite and preferred strategies, sectors and markets for 2021.

Regarding overseas real estate investment, 94 percent of Korean investors responded that they intend to buy overseas real estate this year. The findings differed from most of their other Asia-Pacific counterparts who preferred Asian markets due to their familiarity with the region and its relatively better containment of the coronavirus pandemic.

Among the Korean investors looking overseas this year, 60 percent indicated a preference for the US. Tokyo, Hanoi and Singapore were among the preferred investment destinations in Asia-Pacific region.

“The intention of a large percentage of Korean investors to purchase real estate overseas, and especially in the US, is likely due to recent shifts in the dollar-won exchange rate which has reduced foreign currency hedging costs for Korean buyers targeting these markets. CBRE data shows the US attracted 14 percent of total Korea outbound investment in 2019, a figure that rose to 53 percent in 2020,” said Claire Choi, head of research at CBRE Korea.

Seoul became the third most popular city for real estate investment, the city’s highest ranking on record, among Asia-Pacific investors in 2021, the report also showed.

Due to increasing demand for industrial and logistics property, Korean investors identified logistics as their preferred sector for investment. The sector was also named the most popular asset class for investment by Asia-Pacific investors participating in this year’s survey, the first time it has claimed the top spot.

Regarding environmental, social, and corporate governance, or ESG, 34 percent of Korean respondents said they already incorporated ESG criteria into their investments, while 49 percent of Asia-Pacific respondents stated that they had adopted ESG criteria in their investment strategies. Some 60 percent said they either plan to adopt ESG criteria within the next five years or are considering doing so, implying that the adoption of ESG standards among Korean real estate investors will accelerate in the coming years.

By Kim Young-won (wone0102@heraldcorop.com)