Korean investment firm has dominated headline recently after it acquired a majority stake in Aurora Place, Sydney, Australia which is often considered as the country’s most expensive and prestigious commercial property, the deal was worth over $650 million (US$585 million) demonstrating the power of Korean investment firms.

This time, the transaction was made by Korean Pension Fund; which has been investing in international real estate projects quite aggressively over the past 24 months; they have been buying properties of all sorts as well as resorts, hotels and funding international infrastructure projects.

For many Western real estate companies; Korean investors are often not the first investor that comes to their mind straight-away; most of attention have been on Chinese investors these days; but in fact, there are many other Asian real estate investors out there; and Korean and Singapore are 2 places you should look into when comes to real estate investments.

Both nations have undergone the phase of “REITalization” as some of called in Asia; property investors have been institutionized in both markets; and both have a large number of REITs now listed on their local stock exchanges.

It is also interesting to see that amongst the 20 Biggest Private Equity Firms for Real Estate for 2009, Capitaland from Singapore was included as the only one from Asia; the other 19 spots included 18 US companies and ING from Netherlands.

Different Global Investment Thinking

To understand more about these investors; you have to understand how investors operate in these 2 markets. Both Korea and Singapore are “Tiger Economies”; both rely on exports; and both are relatively more “global thinking” than most of other Asian economies.

Institutions in Korea and Singapore have been sponsored by their Government and large conglomerates (which are often backed by Government as well); in Korea; many REITs were funded by large conglomerates such as LG and Samsung; in Singapore; as we know, Temasek is still the largest private equity fund there (and probably in the world).

It is important to realize this as this means the “risk-appetite” tends to be lower than most of Western funds; Singaporean and Korean funds are less likely to participate in riskier assets; typically; they will invest in income-producing properties instead of Greenfield development projects.

However, Singaporean & Korean funds like to invest in Property companies; often taking a strategic stake and management board in new property company so that they can also participate in the development and the management.

In terms of the projects they like to invest; to date; commercial properties seem to be attract most attentions from these funds; they are looking at rental yield 6% or above; as it is hard to get a rental above 6% in Asia these days.

Singaporean funds like Capitaland has been investing in retail centers as well; they are particularly aggressive in South East Asia; in the past; they were the most active investors in Australia, New Zealand and India. Since the early 2000s, Singaporean investors have shifted their attentions to US, Canada and Japan as there are only limited opportunities in Australia now.

Hotels are another attractive opportunities considered by many of these funds / property companies; and they would usually take more proactive approach rather than being passive investors. Once again, typically, they would prefer to invest in established projects instead of new hotel developments; some of the Singaporean & Korean Real Estate companies are attached to the local construction & engineering firms; and therefore; they are able to provide further project financing if required.

We have published a report Real Estate Developers &REITs – Asia Pacific which includes a large number of Real Estate related companies in Australia, Singapore, Japan, Korea, China, Taiwan, Hong Kong and others. For more information about this report, please visit website http://researchwhitepaper.com