Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Financial firms unload real estate to secure cash
Hyundai Marine & Fire Insurance's 19-story Gangnam office building is on the real estate market. / Courtesy of Hyundai Marine & Fire Insurance
By Anna J. Park
By Anna J. Park
Hyundai Marine & Fire Insurance, one of Korea's biggest non-life insurers, is about to sell its office building located in the heart of affluent Gangnam-gu in southern Seoul. Currently, about 10 entities have submitted bid proposals to purchase it, and a preferred bidder is likely to be selected in early June.
Completed in 2001, the 19-story building with a gross floor area of 34,983 square meters is estimated to cost about 370 billion won ($301 million) and is expected to be the most expensive building south of the river to be sold since Samsung C&T sold its Seocho-gu office building in mid-2018.
The insurer's official explained that the decision to sell the building was based on a number of factors. The expected adoption of K-ICS by 2022 ― the Korean-Insurance Capital Standards announced by the Financial Supervisory Service ― has also been a major part of the decision. K-ICS is slated to be implemented in Korea in conjunction with the 2023 adoption of the International Financial Accounting Standards 17 (IFRS17), which is a modified system of financial accounting and actuarial methodology.
“The decision was made from considerations not only that once the K-ICS is adopted, a danger coefficient for real estate is to be increased, but also that now is an appropriate time to sell the property and realize profits, given a rise in price and market conditions,” an official from the insurer told The Korea Times.
Other insures like Hanwha Life and Meritz Fire & Marine Insurance are currently in the process of selling their office buildings and other real estate located nationwide. An unnamed market insider said insurers' selling of real estate is to prepare for the adoption of K-ICS by 2022, as well as to respond to the global pandemic-led economic downturn.
Korea's major banks are also selling their properties to improve their financial soundness amid COVID-19 shocks. KB Kookmin Bank announced earlier this month that it is to sell 10 properties in Seoul and Busan, among others. Bids will be received later this month.
“The bank is undergoing the selling of real estate properties as more and more of the bank's branches are integrated into a larger unit,” an official from KB Kookmin Bank said.
Hana Bank has also notified that it will sell 26 real estate properties located nationwide, including in Seoul, Busan and Jeonju. Last year alone, domestic banks' net profits decreased by 1.2 trillion won, or 7.7 percent from that of the previous year.