Korean Major Investors in US Real Estate... 88% Increase in Investment Last Year

Hedge Costs and Real Estate Price Declines Drive Investment Surge
US Emerges as Key Investor in Real Estate
Main Purchase Targets Are Warehouses in Small and Medium-Sized Cities

Amazon's large warehouse
Photo by EPA Yonhap News

[Asia Economy New York=Correspondent Baek Jong-min] An analysis revealed that South Korea's investment in U.S. commercial real estate surged by 88% compared to the previous year.

The Wall Street Journal (WSJ) reported on the 16th (local time), citing data from real estate research firm Real Capital Analytics (RCA), that South Korea's investment in U.S. commercial real estate reached $5.2 billion last year, an 88% increase in dollar terms compared to the previous year.

RCA had previously identified in November that from January to September last year, South Korea's U.S. real estate investment amounted to $1.56 billion, a 25% increase compared to the same period the previous year.

South Korea's investment growth contrasts with the overall overseas investment in U.S. real estate, which declined by 31% year-on-year to $35.5 billion due to the COVID-19 pandemic last year. As of September last year, the ranking of countries investing in U.S. real estate was Canada, Germany, and South Korea.

WSJ noted a clear perception among real estate brokers that South Korea has emerged as a major player, citing as an example the National Pension Service's purchase of 23 warehouses for $2 billion last year.

The significant increase in South Korean investors' purchases of U.S. commercial real estate is attributed to the drop in property prices due to the impact of COVID-19 and the decline in currency hedging costs.

In contrast to South Korea's rapid rise, China, which had focused on buying hotels and other properties in the U.S., failed to rank within the top 10 countries investing in U.S. real estate for two consecutive years. WSJ interpreted this as a result of Chinese authorities urging major overseas real estate investors to restrain overseas investments and the escalating U.S.-China tensions.

The perspective of overseas investors on U.S. real estate has also changed. While high-rise buildings in major cities were previously the main targets of overseas investors, large warehouses located in suburban areas are now the top investment priority.

Jim Costello, Senior Vice President of Real Capital Analytics, explained, "Overseas investors have focused on the surge in warehouse demand driven by the increase in e-commerce."

Investment regions are also shifting. WSJ reported that more investors are showing interest in small and medium-sized cities in the rapidly growing southern region. In Sacramento, California, for example, overseas investors' real estate purchases doubled last year.

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