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"Buy Japanese Real Estate"...Domestic investors' inquiries have increased.

"Buy Japanese Real Estate"...Domestic investors' inquiries have increased.

June 11, 2019
[The Korea Economic Daily / Korea Joongang Daily Japanese Edition]


Global PMC 'Deal Broker'
Heavy burden of domestic capital gains tax, etc.
Overseas investment jumped 34 percent last year.

The number of high-net worth individuals buying Japanese properties is on the rise.

Global PMC/Corfac International, an overseas real estate investment advisory firm, clinched two deals in Japan last month. The individual investor bought a penthouse apartment in Minato-gu, Tokyo, for about KRW13 bil. (U$12 mil.). Another investor, B, bought five new residential mansion units in Tokyo for KRW 2 billion (U$1.8 mil.). Established in 2004, Global PMC, a small and medium-sized building asset management company, has contracted with Shinhan Bank and Hana Bank to provide overseas real estate investment advisory services. In December last year, the company also brokered the purchase of a small and medium-sized building (KRW13 bil., U$12mil.) in Chuo-gu, Tokyo.

"The attractiveness of domestic real estate investment has fallen sharply because of the heavy burden of capital gains tax, and so on," said Kim Yong Nam, CEO of Global PMC. "Asset owners are showing high interest in overseas real estate investment in terms of portfolio diversification."
Foreign real estate investment section was the most popular at the '2019 Real Estate Expo' held at COEX, Seoul, Korea, on July 7-9. A PMC official said, "Over 40 consultations were held during the fair," and asset owners were mainly interested in real estate investment in developed countries such as Japan, the US, Australia and Canada. " Mr. Tadashi Kurimoto, a real estate investment adviser in Osaka, said, "Until last year, Chinese people invested mainly in Japanese real estate, but inquiries from Koreans are increasing this year. It is desirable to invest with a stable return rate of around 5%. "

According to the Ministry of Strategy and Finance, foreign direct investment in real estate last year was $ 5,078 million, up 34.8 percent from the previous year ($ 3,767 million). Foreign direct investment refers to the amount of direct foreign investment by an individual or corporation in Korea. The amount of foreign direct investment in real estate for renting is also included in foreign direct investment.

Over the years, overseas real estate investment has mainly been regarded as an area of institutional investors with funding ability. Individual investors mainly invested indirectly through RITs and funds. However, industry officials said that access to overseas real estate has improved significantly with the advent of foreign real estate investment advisers. Overseas real estate investment consulting firm supports the whole process from introduction of goods to post-contract management.

According to the Ministry of Strategy and Finance, overseas direct investment in real estate amounted to $50.78 billion last year, up 34.8 percent from $3.76 billion a year earlier. Direct overseas investment means the amount invested directly by an individual or a corporation living in Korea overseas. Funds that bought real estate overseas to conduct rental businesses are also included in the amount of direct overseas investment.

So far, overseas real estate investment has been largely seen as the domain of institutional investors with financial power. Individual investors mainly made indirect investments through REITs and funds. However, with the emergence of overseas real estate investment advisory companies, access to overseas real estate has greatly improved, according to industry insiders. Foreign real estate investment consulting companies will support the entire process from introducing goods to follow-up management of contracts.

Min Kyung-jin, a reporter, min@hankyung.com

 



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