[Interview] Hana Asset bets on retail demand for overseas real estate

The asset management unit of South Korea’s Hana Financial Group is preparing to launch two new public funds investing in overseas real estate, betting on demand from wealthy individuals, or those with about $2 million to $3 million in assets, who are diversifying portfolios into foreign-currency assets, said its chief executive officer.

Hana Asset Management Co. Ltd. raised 156.4 billion won ($140 million) last week from a public real estate fund for the purchase of the NASA head office building, a day earlier than the closing date. The fund added to a series of public funds recently launched in the country to finance overseas real estate purchase.

Moon-hyun Cha, CEO of Hana Asset, said it had already planned to raise part of money from individual investors when bidding for the NASA headquarters building, dismissing market talk that it shifted to individual investors after failing to attract money from institutional investors.

“Public funds targeting individual investors will become a new source of capital to buy oversea properties,” he told the Korean Investors in a recent interview.

“After our market research, we concluded that individuals with about $2 million to $3 million in assets would put money into public funds for overseas real estate.”

South Korean asset managers were among aggressive bidders of cross-border real estate assets in the past few years and focused on selling down their interests in foreign investments to other institutional investors.

Now that domestic institutional investors appear to have reached their ceilings of overseas real estate investments, domestic asset management firms started turning to retail investors, supported by loosened regulations on public funds and ample market liquidity.

Of 45 trillion won committed to real estate funds in South Korea, public funds for individual investors represent just 2.6% or 1.5 trillion won. “This means overseas real estate investments backed by individual public funds have unlimited growth potential,” Cha added.

He was installed as Hana Asset’s CEO last year. Prior to that, the veteran retail banker had served as chief executives of other South Korean asset management firms after joining Busan Bank in 1972.