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| Daishin Financial Group Chairwoman Lee Auh-ryung, center, Daishin Asset Trust CEO Kim Chul-jong, right, and Daishin Securities CEO Na Jae-chul, left, pose at the group's headquarters in Seoul, Monday, after celebrating the launch of the real estate trust operator. / Courtesy of Daishin Securities |
By Park Jae-hyuk
A growing number of financial companies are entering the real estate trust market, as the business is considered to allow them to secure a stable source of income and attract wealthy customers, according to finance industry officials, Monday.
Real estate trust operators make profits by developing and managing real estates entrusted to the company.
Their business model has been regarded as lucrative, given the combined net profit of domestic real estate trusts has continued to rise over the past five years.
According to the Financial Supervisory Service, the combined net income of the country's 11 real estate trusts reached 507.7 billion won ($428 million) in 2018, up 0.6 percent from a year earlier.
Against this backdrop, banking groups, brokerages and insurers are speeding up their efforts to acquire real estate trust operators or set up real estate management companies.
Daishin Financial Group is the latest one that made such an effort.
The parent company of Daishin Securities said it launched Daishin Asset Trust, Monday, to make a new leap toward being a financial group with specialties in both finance and real estate management.
"We will differentiate ourselves from other real estate management operators with our new business model that integrates finance with real estate," Daishin Asset Trust CEO Kim Chul-jong said.
Daishin, which was licensed to operate the real estate trust company July 24, is the first company that has entered the real estate trust market over the past 10 years.
Since 2009, there has been 11 real estate operators in Korea without any new entries.
In addition to Daishin, the two other real estate trust operators created by brokerages are also set to begin their operations.
Shinyoung Asset Trust and Korea Investment & Securities Real Estate Trust, both of which got preliminary approval from the nation's financial regulator in March, will likely start their businesses in August.
Shinyoung Asset Trust was formed by Shinyoung Securities and Eugene Investment & Securities. Korea Investment & Securities Real Estate Trust was established by Korea Investment Holdings.
Among the giant banking groups, Shinhan Financial Group and Woori Financial Group have been seeking to expand their presences in the real estate trust market.
Shinhan acquired Asia Trust in May, while Woori took over Kukje Asset Trust on July 25.
The purpose of their acquisitions was to strengthen their non-banking sector businesses.
As for insurance company, Kyobo Life Insurance bought a 50 percent stake in Saeng Bo Estate Trust from Samsung Life Insurance, July 25, to hold a full stake in the real estate trust operator which was established through a joint investment by the two insurers.
"Under the aim to double our sales within the next five years, we will foster Kyobo Life to be a firm that offers comprehensive services in real estate and finance," a Kyobo Life Insurance official said.
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