South Korea Led Asia’s Outbound Investors in 2019 with $17B in Deals

South Korean buyers spent $17 billion on real estate outside of their home region during 2019, making the country Asia Pacific’s biggest cross-border property investor last year, according to data provider Real Capital Analytics.

Driven by office investments in Paris, Frankfurt and Brussels, Korean investors last year spent nearly double the country’s previous record commitment to non-Asian real estate assets of $9.6 billion set in 2017.

With investors from mainland China constrained by tighter lending conditions at home, South Korean sources accounted for nearly half of all real estate investment outflows from Asia during 2019, and pushed 2018 champion Singapore into second place, the property information firm’s figures show.

Hana Financial Leads Korean Wave

South Korean investors aimed the bulk of their outgoing capital in 2019 at Europe, making some of the continent’s highest profile deals last year, as Asian appetite for property in the old world expand beyond the UK.

The surge in Korean property acquisitions in Europe was led by Hana Financial Investment, which upped its European property purchases by 116 percent last year, spending a total of €12 billion on property assets on the continent. The buying spree made Hana the ninth-largest buyer of European assets last year, just behind German fund manager BVK. Hana’s ranking marked the first time that a Korean investor had placed among the largest property buyers in Europe, according to RCA’s numbers.

As part of its purchase last year Seoul-based Hana completed the KRW 1.3 trillion ($1.1 billion) purchase of The Squaire office building in Frankfurt from Blackstone at the end of 2019, adding Germany’s largest office building to its portfolio.

In another big-ticket deal, brokerage Mirae Asset Daewoo in July teamed up with French asset manager Amundi Real Estate for its own office deal, acquiring the Majunga Tower in Paris  for KRW 1.08 trillion ($925 million).

Industry analysts indicated that Korean hunger for European property grew last year due to a convergence of monetary and economic influences.

“Thanks to a perfect storm of factors such as a favourable currency exchange rate between the Euro and the Won, relatively cheap European debt, the domestic property market in South Korea as well as the relatively stable political climate in Europe have meant that capital has flowed into the European real estate market,” said Tristam Larder, Savills’ co-head of regional investment advisory EMEA.

European Offices Get Some Love

With this cocktail of factors making the continent fashionable with Korean buyers, property acquisitions from the Asian nation grew by 122 percent during 2019, compared to the previous year, jumping to €12.5 billion from €5.6 billion, according to Savills.

By sector, South Korean investors directed most of this cash into offices, with €8.7 billion of their total spending in Europe — some 70 percent — going into buildings devoted to desk space.

This preference for offices over other classes is likely to stay, according to RCA’s analysts.

Tom Leahy, a senior director with Real Capital Analytics in London, told Mingtiandi that there is a “clear bias towards large, prime office buildings and logistics units let to major international occupiers like Amazon and we’ve seen little evidence thus far, beyond a handful of hotel deals, that this will change.”

South Korean Capital Continues to Flow

So far in 2020 Leahy has been proven correct, with a consortium led by Seoul-based Meritz Securities in January agreeing to make the highest value purchase ever of a single property in Belgium.

The South Korea-led team, which was reported by Bloomberg to also include London-based property investment manager The Valesco Group and Seoul’s AIP Asset Management, is said to have paid Dutch asset manager Breevast BV €1.4 billion ($1.6 billion) for the 36-storey Finance Tower in Brussels.

That Belgian buy was followed this month by a Korean-Finnish investor consortium including NH Investment & Securities and Shinhan Investment Corp agreeing to spend €480 million to buy Gebhardinaukio 1 in Helsinki — the largest ever purchase of office asset investment in Finland.

European Logistics Attract South Korean Cash

With the continuing momentum of e-commerce driving logistics demand, Europe’s warehouses took second place on South Korean investors’ shopping lists.

Savills said the logistics sector accounted for 25 percent of spending by South Korean investors in Europe during 2019, with the East Asian nation committing €3.1 billion to the continent’s big boxes.

Just three months ago, Mingtiandi sources indicated that ESR’s Kendall Square Asset Management had acted on behalf of Samsung Securities to acquire the largest logistics facility in the Czech Republic for €132 million.