FEATURE
Feature
SOUTH KOREA : DEVELOPED ECONOMY , EMERGING REIT MARKET
As South Korea ’ s REIT market expands , its secondary fund-raising offerings process could be simplified and streamlined to help bolster growth
Photo by Daniel Bernard on Unsplash
By Christian Bernasconi , Managing Director at B & I Capital
South Korea is Asia ’ s second-biggest developed economy with a large and deep real estate market that has been difficult for institutional investors to access until recently . Large amounts of real estate remain in the hands of corporate owners and large domestic pension funds . REITs currently only represent 0.2 % of the market capitalisation of the KOSPI , and private REITs have dominated the market . By contrast , public REITs in the U . S . are approximately 6 % of the U . S . market cap , and in Japan , which only started in the early 2000s , the value is now approaching 4 % of its nation ’ s market cap . However , things are changing with the support of government policies to encourage public REITs . We have witnessed several new listings , including Lotte , Shinhan , ESR and most recently , SK Corp . In addition , speaking to one REIT manager in South Korea , they indicated that the country ’ s pension funds are also interested in the space . While there have only been a few IPOs and secondary offerings , all the main listings have been successful , which has helped to build a track record . Indeed , SK REIT , the most recent REIT IPO , had surged almost 30 % since its listing last month . There are potentially several more K-REITs to list in the coming year , according to
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