Korean investors look exposed after their five-year binge on second-tier commercial buildings abroad
Korean investors, who’ve been on a five-year binge on this second tier of commercial buildings, look particularly exposed. Seoul’s Hana Alternative Asset Management is preparing to put the Poultry site back up for sale, people with knowledge of the process say. Its estimated worth is £125 million , according to the same people – about a third less than Hana paid. The firm declined to comment.
Between 2017 and 2022, the investors snapped up more than 90 European properties for prices above €200 million each. Many were large blocks in the City of London and Paris’s La Defense. Values in both financial hubs have fallen more than 20 per cent in the past year, according to broker Savills. Financially, the timing of the market shakeout couldn’t be much worse for Korean investors. About 30 trillion won of their property funds mature up to 2025, according to data provided by national watchdog the Financial Supervisory Service to opposition party lawmaker Oh Gi-hyoung. That’s almost 40 per cent of the total, meaning a flood of commercial buildings could be about to hit the market at a time when demand has cratered.
While the watchdog is worried about potential losses for domestic investors, a third official says there won’t be a rush to withdraw cash because Koreans typically have to wait until a fund winds down. Most are backed by institutional money, which is less likely to panic, the person adds. In Hong Kong, a unit of Korea’s Mirae Asset is cutting by 80-100 per cent the value of a fund that provided more than $240 million of mezzanine finance to the Goldin Financial Global Centre, according to local media. A Mirae spokesperson says it’s focused on recovering money.
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