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The growth of real estate-backed funds in Korea

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Frame of Image nds by small investors, diversify types of real estate investment, and induce financial investment firms to increase investment in real estates. In Korea, real estate-backed funds were first introduced in 2004, and its volume has grown to KRW21 trillion as of May 2013, despite the slump in construction industry and property market. It is a significant growth of 24% y.o.y, accounting for 6% of the total funds worth KRW344 trillion. Considering the fact that funds backed against real assets have high leverage, it is assumed that a much greater amount of funds have flown into real estate-backed funds. (Note: D Real Estate Trust held KRW158 billion of equity capital and KRW128 billion of borrowing as of May 2011). The sharp growth of real estate-backed funds reflects an expansion of alterna ve investment by ins tu on-
al investors amid low interest rate environment, slow stock markets, a decline in poten al growth and investment return, as well as mul plying assets of pension funds and insurers that seek investment opportuni es. The poor return on equity-indexed funds sparked interest in non-equity products. Also, the broad market percep on is that the property market has bo omed out and would begin to look up in the future. Another factor behind the growth of real estate-backed funds is rela vely sound profits generated from commercial proper es despite a chilled housing market. In particular, pension funds and insurers are showing keen interest in property market as the destinati


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Title The growth of real estate-backed funds in Korea
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Material Type Reports
Author(English)

Lee, JiEun

Publisher

Korea Institute of Finance

Date 2013-07
Journal Title; Vol./Issue Weekly Financial Review:21/37
Pages 2
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Direct Investment
Holding Korea Institute of Finance