"Lost Money Poured into REITs"… Asset Size Increased by 26% in One Year

Yeouido office building exterior view (Photo by Sangga Information Research Institute)

[Asia Economy Reporter Onyu Lim] An analysis suggests that idle funds, lost due to the government's strong real estate regulations, are flowing into REITs (Real Estate Investment Trusts). REITs refer to an indirect real estate investment method where funds are collected from multiple investors to invest in real estate or real estate-related securities, and the profits are returned to the investors.

According to the Commercial Property Information Research Institute on the 8th, the asset size of REITs, which was about 48.9 trillion KRW last year, increased to 61.4 trillion KRW as of this date. This is an increase of approximately 25.6% compared to last year.

Not only the asset size but also the number of companies operating REITs is on the rise. As of this date, the number of REITs registered in the market is 285, marking eight consecutive years of increase since REIT statistics began in 2012 (71 companies). So far this year, 53 REIT companies have obtained approval or registration, marking three consecutive years of growth since 2017. REIT companies listed this year include Aegis Value REIT, Mirae Asset MAPS REIT, Aegis Residence REIT, JR Global REIT, and Koramco Energy REIT, with a total of 12 REIT companies currently listed on the market.

REITs distribute profits to investors in the form of dividends. Fourteen companies have dividend yields exceeding 10%, and three companies have yields exceeding 20%. On the other hand, 95 companies have a dividend yield of 0%, indicating that many REITs do not pay dividends.

Researcher Hyuntaek Cho of the Commercial Property Information Research Institute stated, "Direct real estate investment has become difficult due to current real estate regulations and increasing investment entry barriers." He added, "Interest in REITs, which have relatively lower entry barriers, tax benefits, and steady profits, continues to grow." He further advised, "Before investing in REITs, investors should verify whether the investment company managing the REIT guarantees safety and expertise, and consider rental income as well as investment returns upon future sale."

This content was produced with the assistance of AI translation services.