REITs Establishment Accelerated by 3 More Months

Amendment to the Enforcement Decree of the Real Estate Investment Company Act Approved at the Cabinet Meeting
Amendment to the Enforcement Decree of the Special Act on the Creation and Development of Innovation Cities Also Approved

Starting from the 21st, the establishment of asset management companies (AMCs) that invest in and operate REITs (Real Estate Investment Trusts) assets will be accelerated by three months.

The Ministry of Land, Infrastructure and Transport announced on the 6th that the revision of the Enforcement Decree of the Real Estate Investment Company Act, which includes this content, was approved at the Cabinet meeting.

According to the revision, the preliminary approval system in the establishment procedure of AMCs managing REITs assets will be abolished. Previously, establishing an AMC required a two-step approval process: preliminary approval followed by final approval. Through this revision, the establishment of AMCs is expected to be simplified.

REITs are companies established to pool funds from multiple investors to invest in and operate real estate, distributing profits such as rental income to investors. According to the Korea REITs Association, as of May, the total asset size of domestic REITs was approximately KRW 98.2 trillion.

REITs are divided into entrusted management REITs, self-management REITs, and corporate restructuring (CR) REITs. Among these, entrusted management REITs and CR REITs must entrust asset management to AMCs. Unlike self-management REITs, these REITs are nominal companies without a physical entity.

Meanwhile, the Ministry of Land, Infrastructure and Transport also announced at the Cabinet meeting that the revision of the Enforcement Decree of the Special Act on the Creation and Development of Innovation Cities was approved.

According to this revision, starting from the 21st, buildings constructed on industry-academia-research clusters in innovation cities can be sold at market prices without transfer price restrictions seven years after receiving usage approval under the Building Act. This relaxation of transfer price restrictions is a measure considering the activation of corporate investment and fairness with similar development projects such as urban high-tech industrial complexes.

Previously, since industry-academia-research cluster sites were supplied at development cost, the transfer price was calculated based on the acquisition price, producer price index increase rate, taxes, and other combined amounts. Facilities or buildings could only be sold based on appraised value. As a result, occupancy by beneficiaries was low.

The Ministry of Land, Infrastructure and Transport plans to increase corporate investment in industry-academia-research clusters and promote occupancy by beneficiaries through this regulatory relaxation.

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