Korean Money Moves into US Housing Market

Asia Economy DB

[Asia Economy Reporter Park Soyeon] Large-scale domestic institutional funds have been poured into the U.S. housing market, which has continued to boom since the COVID-19 pandemic. As interest in better living environments has increased since the pandemic, investment in related markets is also on the rise.

According to the investment industry on the 6th, the Military Mutual Aid Association recently invested 60 billion KRW in a blind fund managed by a U.S. asset management company called ‘Related Fund Management.’ This fund invests in residential multi-family housing and other housing-related real estate across the United States. It is also known that another domestic institution in the form of a consortium has invested in this fund.

The Police Mutual Aid Association also recently invested 30 billion KRW in equity in multi-family housing worth a total of 300 billion KRW located in the Boston area of Massachusetts, USA. It is reported that several domestic institutions are currently conducting investment reviews on this real estate. Aegis Asset Management, the top asset management company in Korea, also purchased equity in multi-family real estate in the Alexandria area of Virginia, USA, last year through the formation of a private equity fund.

An industry insider explained, "The U.S. office market has completely collapsed due to the experience of working from home and interest rate hikes after COVID-19, but interest in housing has rather increased. Those who have experienced working from home once find it difficult to return to the previous way, and demand for larger and more comfortable housing has greatly increased due to the pandemic."

Amid global tightening fears and volatility in domestic and international stock markets, it is interpreted that chief investment officers (CIOs) of major institutions managing trillion-won funds have focused on the U.S. housing market. Last year, existing home sales in the U.S. recorded the highest level in 15 years. Although the Federal Reserve’s announcement of interest rate hikes this year was expected to ease the rise in housing prices, the U.S. housing market remains hot. New home sales are also booming. According to the U.S. Department of Commerce, housing starts in December last year were recorded at 1,702,000 units, exceeding experts’ forecast of 1,650,000 units.

Recently, with housing prices soaring and mortgage interest rates also skyrocketing, rental demand has exploded. In resort cities such as Florida, monthly rents have surged by more than 50% compared to before the pandemic. According to the U.S. real estate platform company ‘Zillow,’ U.S. home sale prices in the first quarter of this year rose 20.3% compared to the same period last year, and rental prices also increased by 16.8%. In March this year, the U.S. consumer price inflation rate reached 8.5% year-on-year, marking the highest level in 40 years.

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