South Korea's Land Assets Last Year 5.0 Times GDP... 'Record High'

Bank of Korea and Statistics Korea '2020 National Balance Sheet (Provisional)'

[Asia Economy Reporter Kim Eun-byeol] Last year, as real estate prices surged, the ratio of land assets to Gross Domestic Product (GDP) reached an all-time high of 5.0 times. Real estate, including land and buildings, accounted for 77.0% of non-financial assets. Due to the continued rise in real estate prices following COVID-19, it is expected that the proportion of real estate in national wealth may increase further.

According to the "2020 National Balance Sheet (Provisional)" released on the 22nd by the Bank of Korea and Statistics Korea, land assets last year amounted to KRW 9679.4 trillion, an increase of KRW 917 trillion (10.5%) compared to the previous year. As of the end of last year, land assets reached about 5.0 times the GDP.

The ratio of land assets to GDP has steadily increased from 4.2 times in 2017 to 4.3 times in 2018, 4.6 times in 2019, and 5.0 times in 2020. Since the related statistics began to be compiled, the ratio of land assets to GDP is at its highest level ever.

The Bank of Korea explained, "The increase in land assets was mainly due to the rise in residential buildings and land attached to non-residential buildings." While nominal GDP grew by 0.4% last year, land assets surged by more than 10%, resulting in a higher ratio relative to GDP.

As of the end of 2019, the regional status of land assets showed that the Seoul metropolitan area accounted for KRW 5008.9 trillion, representing 57.2% of the total. The growth rate compared to the previous year was 7.1%, surpassing the 5.8% growth rate of non-metropolitan areas.

During 2019, the proportion of the Seoul metropolitan area expanded from 56.9% to 57.2%, while the share of non-metropolitan areas shrank from 43.1% to 42.8%.

The Bank of Korea stated, "In the 2000s, the growth rate in the Seoul metropolitan area was higher than in non-metropolitan areas, but this reversed after 2011. However, since 2018, the Seoul metropolitan area has again shown higher growth."

In 2020, real estate (land + buildings) accounted for 77.0% of non-financial assets due to the increase in land. This is an expansion compared to 76.1% in 2019. On the other hand, the share of producer assets excluding buildings was 22.7%, a decrease from 23.6% the previous year.

Meanwhile, as of the end of last year, South Korea's net national assets (KRW 1,772.22 trillion) recorded 9.2 times nominal GDP, an increase from 8.6 times the previous year. Although net external financial assets slightly decreased, non-productive assets centered on land assets increased.

South Korea's net external financial assets, calculated by subtracting external financial liabilities from external financial assets, stood at USD 466.1 billion last year, down from USD 517.8 billion the previous year. The Bank of Korea explained, "Despite an increase in external financial assets due to expanded overseas securities investment, external financial liabilities increased more significantly due to factors such as domestic stock price rises, resulting in a decrease of USD 51.7 billion compared to the end of the previous year."

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