South Korean REITs

Macquarie Bank, which is an Australian investment bank, listed a real estate investment trust on the Korea Stock Exchange. In this way, it extended its business in Asia’s fourth largest economy. The REIT, the first in Korea to be completely owned by a foreign company, prepares to supply office buildings consistently in the central commerce region of Seoul. The first thing they did was to buy the Kukdong Building. The acquisition makes Macquarie the third largest foreign administrator of profitable property in Korea, an organization with about $500m in office land in Seoul.

David Schaefer is the leader of Macquarie Bank’s Asian real estate business. Recently he said that this new fund will be a very stimulating accumulation to the Macquarie finances management stage in Asia. They have targetd the Seoul central business area market because of the low vacancy rates, the need of new supply, and the predictable upturn in the Korean economy.

South Korea’s possessions marketplace has benefited from an explosion over the past few years, following the government action of giving confidence to property transactions as a way of improving the economy in the rouse of the 1997-98 financial emergency.  It is believed that there is an opening to add substantial value through intensive improved asset management by moving the building in the market by small renovation and change the rent rules.

Macquarie is one of the most important investors in the company.  The bank, jointly with a number of main South Korean institutions, controls about fifty four per cent of the equity.  The remnants were taken up by South Korean trade investors and little economic institutions.  The registering of the REIT followed more than a few investments by Macquarie in South Korea.  The latest shift is probable to make stronger Macquarie’s place in the increasing property funds management business in Asia. It has $23.2bn of real estate, infrastructure, airports and utility funds under international administration.

The U.K. REIT testing is an element of an increasing tendency between countries to take on REIT and REIT-like forms. In latest years, REIT-like systems have appeared in over twenty countries on six continents starting with South Korea down to South Africa.  Every one has its own exclusive set of rules. In the last three years on their own, France, South Korea, Japan, Singapore, Taiwan and Hong Kong have accepted legislation making REIT-like management possible.  Even though Hong Kong REIT is held back by a geographical restraint on deals to Hong Kong properties only, efforts are ongoing to take away that limitation and to authorize investment in mainland China.