Seoul Walk

Since July 2007, the U.S. sub-prime mortgage problems and the increases in credit spreads over government bonds have triggered concerns about a global credit crunch, and caused global stock market volatility.

However, financial institutions in Asia are in a relatively good position with respect to the credit crunch since they have less exposure to sub-prime mortgage instruments than those based in Europe or the US. Some foreign capital is being redirected to Asian property markets, seeking to benefit not merely from the natural appreciation of real estate in dynamic economies, but also from appreciation of Asian currencies against the US dollar, particularly the RMB.

Foreign investors have shown no sign of scaling back Asian real estate investment activity, especially given the relative scarcity of investment grade properties. The combined value of the quarter’s ten largest investment deals in Asia amounted to US$9.3 billion.

In Singapore, a total of S$15.69 billion worth of investment transactions was recorded in the third quarter, a y-o-y increase of 94%, reflecting continued strong local and global investor interest in office properties as well as Singapore’s positive economic fundamentals. The main market drivers were office transactions and continued activity by developers adding to their land banks. At S$40.95 billion, total investment sales in the first nine months of 2007 have already exceeded the total for 2006 as a whole by 34%.

Investment activity in the office sector more than quadrupled q-o-q in the third quarter, with the S$6.83 billion in transactions accounting for 43.5% of investment sales. With rents at an all-time high, REITs and foreign funds remained keenly interested in prime office properties. The sale of Chevron House (formerly Caltex House) to Goldman Sachs for S$630 million (S$2,783 psf) set a new benchmark for office transactions. The sale ranked tenth in the list of the top ten largest investment deals.

CapitaLand divested its interest in Wilkie Edge, a mixed development including office space, to Capital Commercial Trust for S$182.7 million. CapitaLand also acquired the remaining 50% stake in One George Street and The Adelphi from its partner in Eureka Office Fund Pte Ltd for S$715.75 million. K-REIT and Suntec REIT each paid S$941.5 million for one-third stakes in One Raffles Quay. The deals took number 6 and 7 in the list of top ten investment deals in Q3 2007.

In the second quarter Japan’s real GDP growth fell 1.2% y-o-y, entering negative territory for the first time in three years. However, the consensus opinion is that the negative growth is largely a reaction to the high pace of expansion over the previous two quarters, and the economy is likely to expand at a moderate pace. Although the US subprime crisis influenced the Bank of Japan’s decision to keep the overnight call rate at 0.5%, the BOJ remains optimistic about the economy in most regions.

Despite some volatility resulting from the potential global credit tightening, investment market sentiment remained largely positive in Hong Kong, supported by strong economic fundamentals. Local investors continued to dominate the market while institutional players value the market’s transparency and liquidity. Notable en bloc office transactions in the third quarter included the sale of Oterprise Square for HK$2.07 billion and a 45% stake in AIG Tower in a structured deal.

Investment interest in Seoul’s major districts remained intense in the third quarter, with many investors seeking properties through transactions due to the limited supply of buildings on the market. However the sales of Seoul City Tower and Daewoo Center, both located in the CBD, established new benchmarks for capital values. With the steep rise in capital values in major districts, investors increasingly considered opportunities in secondary areas including Sangam Digital Media City, Pangyo IT Valley and Bundang-gu.

The series of macro-economic and regulatory measures introduced to curb investment activity through the end of June 2007 did not lead to any significant reduction in interest among overseas investors in China.

In Beijing, Singapore-based serviced residence management firm Frasers Hospitality bought a luxury residential project, Tower D of OFFICE PARK, located in the core CBD from Sino-Ocean Land Holdings for RMB 980 million. Czech real estate investor ECM bought the 768,485 sf Metropolis Tower, which is Tower C of the Zhongguancun Financial Centre, for RMB 1.06 billion.

Despite additional government measures to curb foreign investment in real estate, Shanghai’s investment market remained buoyant in the third quarter. China Real Estate Opportunities invested approximately US$708 million to acquire a portfolio of mixed-use projects including City Centre in Changning and Central Plaza in Huangpu, and Hong Kong-listed Tian An China Investments and Capital Strategic Investment established a JV to acquire Novel Plaza for US$105 million. Other major deals included Grosvenor’s acquisition of 28 duplex apartments at the Lakeville Regency and Pacific Star and SEB’s purchase of Cross Tower.

Despite continuing macroeconomic control measures, positive sentiment prevailed in Guangzhou’s investment market in the third quarter. Attractive investment yields underpinned investor interest in the city’s office and retail sectors. Increased overseas participation in land acquisition and development and the growing financial strength of domestic companies have resulted in escalating land prices, as record accommodation values were paid in a number of districts over the quarter. A villa project adjacent to Nanhu Lake was reportedly transacted for RMB 2 billion on an en bloc basis.

Korea, acknowledged as the ‘Land of Morning Calm,’ is located in the heart of East Asia, occupying a mountainous peninsula, stretching about 500 miles south towards Japan. In recent years, Korea has made an outstanding progress in reforming its economy, which has attracted foreigners to invest in almost all sectors of economy.

Korea also holds the distinction of being a stable nation in both political and economical wise. All these have strengthened the real estate market in Korea. Investing in Korean real estate allows you to beat inflation, procure tax benefits, ensuring for cash flow, and above all helps you to effectively plan for retirement. In a snap shot, property market in Korea is unique and presents a range of distinctive features.

However, the prices of real estate in Korea are relatively high. The prices are even higher in such prominent areas as Seoul. But, investing in property market in Seoul provides tremendous benefits, due to such attractive features as landlord-friendly leasing system, market lucidity, and easy convertibility of capitals.

The capital as well as commercial center of Korea - Seoul boasts of the largest concentration of commercial property in the nation, with its two significant business districts such as Yoido, which is home to a number of leading financial institutions as well as the Korean Stock Exchange, and Kangnam area. When compared to other prominent Asian global commercial destinations, Seoul’s property market is about 50% larger than that of Hong Kong and about 100% larger than that of Singapore.

The housing or residential development in the country is mostly dominated by the public services, with the instructions of Ministry of Constructions. Housing developments in Korea are primarily undertaken through government agencies such as the Korea National Housing Corporation and the Korea Land Development Corporation.

One of the greatest specialties of Korean property market is leverage, ie, its ability to tie up an important asset for exceptionally small amount. Another feature of investing in Korean property market is freedom, ie it can fetch you good income without affecting or hindering your present job.

Mostly, people invest in Korean real estate in order to provide it for rent or lease. Literally speaking, tenants pay for your investment property in the form of rent. Also, a great feature of Korean real estate is that it provides you with a regular cash flow, which turns out to be an important income, particularly when the mortgage on property is completely paid off. Above all, Korean real estate is regarded as one of the greatest assets. In short, with these unique features, perhaps there would be nothing perfect than investing in a real estate in Korea.

The laws pertaining to buying or selling of real estate in Korea is quite liberal and simple. Further, in contrast to some Asian nations imposing restrictions on foreigners to invest in real estate, Korea does not put forward any specific restrictions for foreigners to buy a property here, except for complying with the FLAA Act or the Foreigner’s Land Acquisition Act.

In order to register the property with the court registry, alien registration number is required. Further, a foreigner is required to submit relevant documents with the local government office within 60 days of the date of the execution of the purchase agreement. Likewise, a foreigner is required to obtain permission from the local government office, if he is interested to invest in any of the protected areas as stated by the FLAA. A resident foreigner can easily acquire a property in Korea, particularly if he has been in the country for more than six months. Some local banks even provide mortgages to resident foreigners just as they provide it to Koreans.

But, in order to ensure secure real estate transaction, it is important that you must have a clear idea on the steps involved in the process of buying a property in Korea. Further, prior to signing a purchase agreement, it is important to thoroughly check the status of the building or land you are going to acquire. Hence, it is recommended that you hire the service of a professional attorney or a reputable real estate agent.

With a myriad of real estate firms and property builders in the scenario, property search in Korea is not at all a tedious process. Apart from property search, these service providers render a range of other services in connection with sales, leasing, portfolio management, valuation, research, and consultation.

Korea, known as the ‘land of morning calm,’ is situated in a key location in East Asia. The mountainous Korean peninsula stretches about 500 miles south towards Japan. In recent years, the country has achieved tremendous economic growth. Modern Korea is a stable nation both politically and economically. A large number of foreigners are now attracted to invest in all sectors of the country’s economy including the property market. This has strengthened the property market in the country.

Korea is one of the prime property investment destinations in Asia Pacific. Not only is the country’s property market transparent, but the economy itself is very dynamic, offering much scope for growth and development.

The term ‘commercial real estate’ includes properties used for commercial, industrial, medical or educational purposes. Residential properties having more than four residential dwelling units also are considered commercial properties. Commercial properties include hotels, office buildings, shops, retail space, and warehouses.

Commercial property market provides massive investing opportunities. Investing in commercial properties means acquiring commercial properties such as mobile home parks, office buildings, retail properties, and even raw land. Commercial properties often carry a higher degree of risk. It turns out to be beneficial only, if you have a sound knowledge about this market.

The property market in Korea offers you much potential for growth, though the prices of real estate in the country are comparatively high. Korea’s property market prices have seen a rapid rise throughout the country, especially in the Seoul metropolitan area.

In 2002, residential property prices increased a sharp 50% over the previous year and commercial property prices hiked up by about 10%. This upward trend in the property prices is expected to continue for some years. The prices are still higher in such prime locations as Seoul. But, investing in commercial properties in Seoul offers you huge benefits, owing to factors such as the landlord-friendly leasing system, market lucidity, and easy convertibility of capitals.

Seoul, the political and commercial capital of Korea, has a large concentration of all types of commercial properties. The two most prominent business districts of Seoul are Yoido and Kangnam. Yoido is home to a large number of financial institutions including the Korean Stock Exchange.

The demand for the country’s commercial property is growing rapidly among global asset managers. Commercial property market in the country has matured to become more stable, and it is the least volatile in Asia with a steady vacancy rate at 4 percent. Asset managers forecast the Korean commercial property market will continue to expand for two to three years since the demand for office buildings and commercial space is strong, whereas supply is limited.

People invest in the country’s commercial properties mostly in order to provide them for rent or lease. The country’s commercial properties are regarded as one of the greatest assets. Commercial property market in Korea is an ideal choice for anyone who wishes to make the most of his money.

Laws pertaining to real estate transactions in the country are quite liberal and simple. Unlike many Asian nations that impose restrictions on foreigners to invest in properties, Korea does not prescribe any specific restrictions for foreigners to buy or sell a property. Foreigners should, however, comply with the FLAA Act (the Foreigner’s Land Acquisition Act).

During the past couple of years, the country’s property market has been greatly influenced by speculative demand, owing to the large amount of available capital and low interest rates. As the earning rates of financial capital have fallen in recent years, Investors have come to look upon real estate as a possible option that may yield large returns as the earning rates of financial capital diminished in recent years.

The real estate fiscal systems in the country include asset-backed securities (ABS), mortgage-backed securities (MBS), and real estate investment systems (REITS). These real estate products can be classified into two categories, depending on their characteristics. The first involves securities based on asset liquidity and the other involves real estate mutual funds or real estate securities.

The country’s real estate financing market will continue to expand in the coming years owing to the steady increase in demand. It is encouraged by government policies designed to promote the secondary mortgage market.