Global alternative investment conference ASK 2024 was held in Seoul on October 16-17, 2024
South Korean pension funds and insurance companies are increasing their investment in real estate, diversifying their U.S. and European-focused portfolios to Australia and Asia, while increasing their appetite for distressed assets.
They believe that the global real estate market is bottoming out due to falling interest rates. Speaking at the global alternative investment conference ASK 2024, the firm’s senior alternative investment managers said the time has come to increase exposure to real estate equity investments and value-add and opportunistic assets.
Harry Song, head of overseas real estate investment, said, “In 2022, we stopped all real estate investments in consideration of the liquidity situation, but in 2023 we will focus on listed products such as REITs (real estate investment trusts) and loans. It was reopened in 2019.” He spoke at the Public Employees Benefits Association (POBA) at ASK 2024 on Thursday.
Speaking during a limited partner panel discussion at a conference hosted by Korea Economic Newspaper, South Korea’s largest business and financial media group, Mr Son said POBA was keeping an eye on the Australian real estate market.
This year, the company has pumped an additional 1.5 trillion won ($1.1 billion) into real estate funds, including a 90 billion won investment in Australia-only Starwood Capital debt fund in June. It will be done.
“While we are prioritizing developed markets over other regions, we are also seriously looking at markets in Asia, particularly Australia. [real estate] It’s the bond market,” said Park Joon, senior alternative manager at Hyundai Marine and Fire Insurance.
The Korea Teachers Credit Union (KTCU), which has 40 billion won in assets under management, committed 110 billion won to PGIM’s investment in Australia this year.
Senior Alternative Investment Manager speaks at ASK 2024 LP session on October 17, 2024
housing, data center
By segment, housing, logistics facilities, and data centers are at the top of the real estate list, as are renewable facilities.
Kim Hyung-gun, senior manager in charge of KTCU’s infrastructure assets, touched on real estate investment plans and said, “We may need to add data centers to our portfolio next year.We will invest in funds that incorporate data centers into their portfolios.” I’m ready,” he said.
Various strategies for office buildings
However, South Korea’s wealthy investors have different stances on the office and commercial markets.
As member deposits decline in the wake of the coronavirus outbreak, valuations for these asset classes have fallen significantly and liquidity issues have worsened, leading some companies to continue to look at the sector. I will continue to avoid it.
“We are working to artificially reduce our exposure to office assets and are instead looking at alternatives in residential and industrial buildings,” Hyundai’s Park said.
“Office is going through a very difficult period, and the retail sector doesn’t look bad so far. But buying office is not easy,” POBA’s Song pointed out.
Real estate was the worst performer for the Public Employees Pension Service (GEPS) in 2024, but before COVID-19, real estate assets accounted for more than half of its alternatives.
Senior Alternative Investment Manager speaks at ASK 2024 LP session on October 17, 2024
However, GEPS is becoming more aggressive with its bottom fishing office assets. The firm recently focused on value-add opportunistic real estate funds after increasing its exposure to real estate this year with a defensive strategy.
Hyundai Kaiyo is also chasing undervalued office buildings in prime locations.
“We are optimistic about the real estate market thanks to interest rate cuts and are interested in investing in special circumstances,” Hyundai Mullins Park said in a statement. “There are very few opportunities to buy quality assets.” [at discounts in 2025]. ”
Park Jae-hyun, managing director of Lotte Insurance’s financial investment division, said in another LP panel session that Lotte Insurance, in addition to non-performing real estate loans, also has stakes in non-performing real estate, such as heavily discounted commercial buildings in the central business district. He said he is considering investing. on wednesday.
Email Yeonhee Kim at yhkim@hankyung.com.
Jennifer Nicholson-Breen edited this article.
