[2023 Gold Age Forum]④ “The Ultimate Ratio of Financial Assets to Real Estate Is Half and Half”

Park Won-gap, KB Kookmin Bank Senior Real Estate Specialist
Real Estate Should Also Be Viewed as Another Financial Product Generating Cash Flow

Park Won-gap, Senior Real Estate Specialist at KB Kookmin Bank, is giving a lecture on the topic "The Future of Population and Real Estate - Wise Coping Strategies" at the "2023 Asia Economy Gold Age Forum" held on the 19th at the Bankers Hall in Jung-gu, Seoul. Photo by Hyunmin Kim kimhyun81@

Park Won-gap, Senior Real Estate Specialist at KB Kookmin Bank, advised, "Considering the population structure, if the proportion of real estate is large, a strategy to gradually reduce it is necessary," adding, "Ultimately, the ratio of financial assets to real estate should be set at 50 to 50." However, he also emphasized the need to distinguish between the near and distant future of the housing market.

On the 19th, Park gave a lecture titled "The Future of Population and Real Estate ? Wise Coping Strategies" at the '2023 Asia Economy Gold Age Forum' held at the Bankers' Hall in Myeong-dong, Seoul.

Park stated, "Not immediately, but when both the population and the number of households decrease simultaneously, the risk of real estate increases further," adding, "In an era of low growth in the real economy, real estate inevitably follows that trend." He further noted, "It is necessary to perceive real estate as another financial product that generates cash flow."

Park predicted that the volatility of the real estate market would intensify due to key variables such as population, climate, and macroeconomics. He forecasted that the investment assetization and financial productization of real estate would deepen.

He explained, "Population is a macroeconomic indicator that drives the national economy and real estate. Nationwide, population decline began in 2020, and the Seoul metropolitan area is expected to see a decline starting in 2036," adding, "The number of households is expected to decrease from 2040, and the housing market is more affected by the decline in the number of households than by population decline."

Regarding climate, he said, "Climate gentrification will occur," and predicted, "In Korea, rapid climate changes are happening, such as banana cultivation becoming possible in Wonju and Hwacheon. As landslides and coastal flooding worsen, people will increasingly prefer urban living over rural life."

He foresaw that consumption would shrink due to low growth and population decline. He also warned that Korea's position as the OECD country with the highest household debt ratio, including jeonse deposits, could negatively impact the real estate market.

He especially anticipated a phenomenon of 'super polarization' in the real estate market. Park said, "Rural farmland will become 'stranded assets,' and there is concern about the 'Matthew effect of space (the rich get richer, the poor get poorer),' where owned real estate feels like a prison," adding, "Polarization will intensify not only in the real estate market but also in the housing market by region."

He expected a stronger concentration in urban centers rather than suburbs. Park explained, "The MZ generation and Alpha generation, who are 'concrete kids' of the city, tend to long for nature less than older generations." He also predicted the emergence of vertical cities and smart cities due to urban preference. Park mentioned, "High-rise residential complexes like Manhattan in New York will become the trend."

He projected that the domestic housing market would come under the influence of the population crisis starting in the 2030s. Park advised, "It is better to distinguish between the near and distant future of the housing market," and predicted, "The real estate market will undergo gradual contraction, and by the 2040s, when both population and household numbers decline simultaneously, the impact will become visible."

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