How About 'Sangjang REITs' Instead of the Volatile Stock Market?

Lotte REITs Rise About 4% This Month
Dividend Yield of 5-6% Expected, Higher Than Deposit Interest Rates

[Asia Economy Reporter Minji Lee] As inflation concerns stimulate government bond yields, increasing volatility in global stock markets including South Korea, interest in listed REITs that can pursue stable returns is expanding.

According to the Korea Exchange on the 19th, Lotte REITs, which mainly holds Lotte Mart and department stores as key assets, recorded a 4% increase to 5,190 won as of this month. Modetour REITs, focused on hotels, rose 5.2%, Mirae Asset MAPS, holding commercial facilities, increased 2.4%, ESR Kendall Square REITs, composed of 11 logistics centers, gained 2%, Shinhan Alpha REITs, which includes office real estate, rose 2%, and Koramco Energy, holding gas stations, also maintained an upward trend of 2%. The KOSPI, feeling the pressure from rising government bond yields, showed high volatility by repeatedly rising and falling, dropping from the 3,200 level to close at 2,976.12.

REITs are products that invest in real estate and distribute rental income and capital gains from sales to investors as dividends. With the continuation of the low interest rate environment, they offer dividend yields of around 5-6%, higher than the 1-2% level of deposit interest rates. Last year, after the stock market plunged due to COVID-19 and then continued to rise, the attractiveness of dividend income decreased, but recently, with expectations of economic activity normalization and forecasts that the value of real estate held by REITs could increase, investor sentiment has improved.

Funds are also flowing into exchange-traded funds (ETFs) that hold listed REITs in global markets. The ‘Vanguard REIT ETF (VNQ)’, which holds mostly REITs listed on the U.S. stock market and is the largest ETF by scale, surged about 8% this year. The ‘iShares Residential Multi-Sector REIT ETF (REZ)’, which holds 50% residential REITs and 50% healthcare and warehouse REITs, rose about 12% during the same period, with a dividend yield of around 3%. Compared to the Nasdaq index, which rose only 1.7% during the same period, this is a steep increase.

Ha Jae-seok, a researcher at NH Investment & Securities, explained, "In the phase of vaccine rollout and economic activity normalization, contact REIT sectors, which were heavily impacted by COVID-19 compared to data centers or untact-related REITs, have high rebound potential," adding, "Since retail, office, and residential REITs have been sluggish, attention to related REITs is necessary."

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