Multi-tenant assets to improve the resilience of Korean real estate investors: analysis

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South Korean investors may focus on multi-tenant commercial properties as they have more room for improvement than single-tenant properties as part of their traditional low-risk strategy amid the prospect of post uncertainties. -pandemic, a research paper revealed on Monday.

Such assets can help Korean investors abroad seek additional investment income and remain resilient in the face of economic uncertainties stemming from an expected rise in interest rates around the world in the wake of the recovery. pandemic, according to research by Seoul-based real estate investment manager Mastern Investment. Management.

Multi-tenant commercial real estate assets, those that have a less stable tenant base with a short weighted average lease expiration, and those that are less costly leased in major business districts could be alternative asset types than Korean investors can buy to rebalance their portfolio.

These assets can help Korean investors benefit from “an increase in net operating income in light of inflation,” noted Ji Hyo-jin, who heads a research team at Mastern, adding that these types of ‘Assets have greater scope for improving valuation, replacing existing tenants with those with better purchasing capacity.

“The increase in market volatility due to COVID-19 requires portfolio rebalancing to cope with asset price volatility during the economic recovery phase,” Ji wrote.

Korean real estate investors abroad have been sensitive to the trends and have tended to follow each other’s bandwagon. After showing a penchant for single-tenant buildings in search of stable capital gains, they began to look to logistics assets leased by Amazon in the wake of the pandemic.

According to Mastern’s estimate, 47% of new real estate investments have gone to distribution centers leased by Amazon since the start of the COVID-19 outbreak until July of this year.

From 2020 to July, Korean investors deployed $ 12.9 billion in capital, according to Mastern. The volume decreased from 2019 to $ 18.8 billion.

Mastern had 25.3 trillion won ($ 21.4 billion) in assets under management, with his portfolio comprising 140 real assets.

By Son Ji-hyoung ([email protected])


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