South Korean investments in European commercial real estate assets in 2019 jumped 122 percent on-year to 12.5 billion euros ($13.9 billion), on the back of Korean investors’ foreign exchange hedging against the euro and lower borrowing costs, data showed Monday.
The acquisition binge also signals Korean investors’ need to digest the earlier deals in the region, according to global real estate consultancy Savills.
An exterior view of Lumiere building in Paris. (Courtesy of Tishman Speyer)
By countries, France boasted the largest volume of Korean investments at 4.5 billion euros, including the purchase of Majunga Tower led by Mirae Asset Daewoo and the Lumiere building deal joined by Hanwha Investment & Securities and Samsung Securities, according to Savills’ preliminary data. Transactions in France soared nearly 13-fold from a year prior.
France was followed by Germany at a total of 1.9 billion euros, up 46 percent on-year, including a deal joined by Hana Financial Investment to buy Squaire building in Frankfurt. Transactions in the United Kingdom fell 27 percent to 1.6 billion euros.
The office sector accounted for 70 percent of the total investments in Europe, followed by the industrial sector that took up 25 percent.
Tristam Larder, co-head of regional investment advisory EMEA at Savills, said the uptrend was attributable to “a perfect storm of factors such as a favorable won-euro exchange rate, relatively cheap European debt, the domestic property market in South Korea, as well as the relatively stable political climate in Europe.”
Larder added that Korean investors “will need some time to digest their record number of acquisitions last year.”
“This year, we expect Korean investors’ higher exposure to real estate market in the US, diversifying their Europe-focused portfolio, said Jae Yoon, head of outbound investment at Savills Korea.
By Son Ji-hyoung (firstname.lastname@example.org