Korea's top real estate managers bulk up assets in COVID-19

Real estate funds in South Korea have increased by 27% to 130 trillion won ($101.4 billion) from 102 trillion won over the past two years, according to the Korea Financial Investment Association (KOFIA) on May 10. Some top local asset managers have significantly ramped up their real estate fund size during COVID-19, thanks to real estate investors hopeful for high returns in the low-interest rate era.  

IGIS Asset Management Co. topped the real estate fund size, managing 18.6 trillion won in assets as of early May. Mirae Asset Global Investments Co. ranked second with 8.1 trillion won in real estate AUM.

Samsung SRA Asset Management Co., Mastern Investment Management Co. and Hana Alternative Asset Management Co. followed scoring 6.8 trillion won, 6.2 trillion won and 5.6 trillion won, respectively. The fund sizes include public and private real estate assets and exclude assets in separately managed accounts (SMAs).  

Asset management firms	Real estate AUM
IGIS Asset Management	18.6 trillion won
Mirae Asset Global Investments	8.1 trillion won
Samsung SRA Asset Management	6.8 trillion won
Mastern Investment Management	6.2 trillion won
Hana Alternative Asset Management	5.6 trillion won

  (Source: KOFIA as of May 4, 2022)

From the end-February of 2020 to early May of this year, Mastern increased its real estate AUM by 143% from 2.6 trillion won to 6.2 trillion won, posting the largest growth rate among the top five asset managers. Its rank jumped from 11th to fourth during the same period.

“Since we registered as “hedge fund investment business entity” in 2017, we have accelerated expansion of real estate assets via the overseas asset and alternative investment divisions,” a Mastern official said. “Also, we set up the team dedicated to blind pool fund management before blind pools became the major trend in the real estate market, and it has achieved great performance,” the official added.  

IGIS and Samsung SRA also beat the overall market growth rate, respectively posting 34% and 30% increase in their real estate AUMs. 

On the other hand, Mirae Asset and Hana Alternative saw their real estate AUMs reduce by 0.2% and 4.3%, respectively. Hana’s rank slid from the third in the end-February 2020 to fifth in early May of this year.

IGIS’ real estate AUM has widened the gap between Mirae Asset’s to 10.5 trillion won. The gap is expected to be further widened -- earlier this week, Mirae Asset was selected as the preferred bidder for the acquisition of the International Finance Center in Seoul (IFC Seoul), winning over its competitor IGIS-Shinsegae Property consortium in the third bidding round.    

Of the local real estate types, office transactions are standing out in Seoul and suburban areas. Grade-A office deals in Seoul hit a record high of 17.1 trillion won in 2021 boosted by low-interest rates and ample liquidity, according to Jones Lang LaSalle Inc.  

In the first quarter of this year, office deals in Seoul and neighboring Bundang Business District (BBD) reached 3.1 trillion won, up 45% from the same period last year, Cushman & Wakefield plc. said. The full-year office deal volume of 2022 will be similar to that of 2021, around 10 trillion won, the real estate investment firm said.

Write to Tae-Ho Lee at thlee@hankyung.com
Jihyun Kim edited this article.