By Jhoo Dong-chan
The nation's major financial firms are eyeing real estate investment trust (REIT) businesses amid the booming apartment market in Korea.
A REIT refers to a company that owns, or in most cases operates, income-producing real estate ranging from apartments to various commercial buildings.
The sector's profit scale has tripled in the last five years, and it is likely to grow further as financial authorities are expected to announce a new set of approval standards for new REIT firms in the coming weeks.
Of the nation's financial firms, NH Financial Group has been the most active player in establishing a new REIT firm.
The group has already jumped into the market by introducing NH NongHyup REITs Management in July, and is now gearing up to establish another REIT arm exclusively for developing the nation's rural areas.
"REIT is taking center stage in the nation's investment market for its steady and high rate of return as a number of people choose it as retirement savings," said NH Nonghyup REITs Management director Jang Nam-ho said during the 2018 Gold Age Forum held at the Korea Federation of Banks head office in central Seoul.
NH Financial Group is said to take an advantageous position in a bid for the approval because of the Moon Jae-in administration's strong drive to promote balanced development between regions where the group is boasting a strong presence especially in the nation's rural areas.
Shinhan Financial Group is also one of the financial firms interested in a REIT business. Unlike NH, however, the group is said to be seeking a possible takeover bid for an existing REIT firm.
Local online business daily Chosun Biz reported Shinhan is targeting Asia Trust for takeover, but a Shinhan Financial Group official showed reservations about the allegation.
"It's true Shinhan is very interested in entering the REIT market," the official told The Korea Times.
"The rumor about Shinhan acquiring Asia Trust has been around for quite awhile, but nothing has been decided at this point. Possibilities are still open for other options."
Asia Trust is the nation's sixth-largest REIT firm with an annual net profit of 28.2 billion won ($24.8 million) last year. Possible cost for the acquisition could reach up to 200 billion won.
Woori Bank, which is expected to turn itself into a holding company by the end of this year, is also eyeing the REIT business as the bank's growth engine for the future.
According to financial circles, the Financial Services Commission (FSC) will announce a set of approval standards for REIT firms as early as Oct. 15. Two or three firms are expected to be included in the approval.
According to a FSC study, sales of the nation's REIT firms have grown 21 percent on average for the last five years and rose above the 1 trillion won level last year.
The nation's major financial firms are eyeing real estate investment trust (REIT) businesses amid the booming apartment market in Korea.
A REIT refers to a company that owns, or in most cases operates, income-producing real estate ranging from apartments to various commercial buildings.
The sector's profit scale has tripled in the last five years, and it is likely to grow further as financial authorities are expected to announce a new set of approval standards for new REIT firms in the coming weeks.
Of the nation's financial firms, NH Financial Group has been the most active player in establishing a new REIT firm.
The group has already jumped into the market by introducing NH NongHyup REITs Management in July, and is now gearing up to establish another REIT arm exclusively for developing the nation's rural areas.
"REIT is taking center stage in the nation's investment market for its steady and high rate of return as a number of people choose it as retirement savings," said NH Nonghyup REITs Management director Jang Nam-ho said during the 2018 Gold Age Forum held at the Korea Federation of Banks head office in central Seoul.
NH Financial Group is said to take an advantageous position in a bid for the approval because of the Moon Jae-in administration's strong drive to promote balanced development between regions where the group is boasting a strong presence especially in the nation's rural areas.
Shinhan Financial Group is also one of the financial firms interested in a REIT business. Unlike NH, however, the group is said to be seeking a possible takeover bid for an existing REIT firm.
Local online business daily Chosun Biz reported Shinhan is targeting Asia Trust for takeover, but a Shinhan Financial Group official showed reservations about the allegation.
"It's true Shinhan is very interested in entering the REIT market," the official told The Korea Times.
"The rumor about Shinhan acquiring Asia Trust has been around for quite awhile, but nothing has been decided at this point. Possibilities are still open for other options."
Asia Trust is the nation's sixth-largest REIT firm with an annual net profit of 28.2 billion won ($24.8 million) last year. Possible cost for the acquisition could reach up to 200 billion won.
Woori Bank, which is expected to turn itself into a holding company by the end of this year, is also eyeing the REIT business as the bank's growth engine for the future.
According to financial circles, the Financial Services Commission (FSC) will announce a set of approval standards for REIT firms as early as Oct. 15. Two or three firms are expected to be included in the approval.
According to a FSC study, sales of the nation's REIT firms have grown 21 percent on average for the last five years and rose above the 1 trillion won level last year.
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