"Coming in the High-Interest Era, Truly Prime Real Estate"

Jung Hee-seok, Head of Koramco Asset Trust Headquarters

Product Value Drops with Flood of Supply

Assets That Survive Risks

Focus on Products Developed from Now On

[Asia Economy Reporter Park So-yeon] "In the era of high interest rates, only real estate with genuine product value will survive."

Jung Hee-seok, Head of the Development Business Division of the REITs sector at Koramco Asset Trust, said in an interview with Asia Economy on the 3rd, "Real estate developments that overcome the crisis situation where raw material prices have increased by 50% and interest rates by 100% paradoxically have truly intrinsic value."

Jung emphasized, "In fact, investors should pay attention to products developed from now on. Real estate development involves risks from the time of land purchase to completion and sale, but those that survive until the end are ultimately high-quality assets possessing the essential values of real estate such as location, layout, and parking environment."

He explained that during the low-interest rate era, developments driven by asset management companies focused more on capital gains than the intrinsic value of real estate, resulting in a flood of projects. However, after the bubble burst, the product value of such real estate significantly declined.

Jung expressed concern, "Looking at the properties supplied so far, they were built recklessly with excessive liquidity, resulting in poor product design and few buildings of good quality. Especially, projects with remaining balances now are in a very unfavorable situation."

He explained, "As the financial procurement environment worsens, real estate prices will enter a stagnant phase for the time being. Unlike before, prices do not immediately rise after completion, making it difficult for investors to exit, which creates a burdensome situation."

Jung’s development philosophy is that in such circumstances, the intrinsic value of real estate becomes more important. Since June last year, Jung has been in charge of Koramco Asset Trust’s development business, currently managing development projects worth about 1.5 trillion KRW. These include urban-type residential housing along the Han River, LH (Korea Land & Housing Corporation) purchase-type rental housing in Ansan, and two logistics centers.

Jung Hee-seok emphasized, "Koramco Asset Trust, the No.1 company in the domestic REITs sector, not only has strengths in selecting investment destinations, asset management, and operational know-how, but also integrates expertise accumulated from development trust projects such as loan-type and responsibility-for-completion types. We work with the goal of completing the value chain throughout the entire process from site selection to investment, construction management, and operation."

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