The Korean Teachers’ Credit Union, with 20.9 trillion won ($18.5 billion) of assets, plans to buy a 12-story office building in London in the first half as declining property prices boost returns.
The credit union will visit the site this month and may team up with three or four Korean institutional investors to buy the property worth 299 million pounds ($471 million), said Lee Kun Ho, executive director at the Seoul-based organization that provides loans and insurance to its members. He declined to identify the tower as he’s still in talks.
“The price is still attractive enough for us to earn around 6 percent annually, and possibly further returns upon selling the building after a few years,” Lee said in an interview on Jan. 31, adding that prices for some properties are falling as banks put more buildings that were repossessed earlier up for sale to increase liquidity.
The credit union is planning its purchase as a two-year recovery in U.K.’s commercial property values petered out in the second half amid Europe’s sovereign debt crisis.
The average value of the nation’s commercial real estate dropped 0.02 percent in November from October, the Investment Property Databank said last month. Values fell 44.1 percent from June 2007 to June 2009 and then rose by 17.9 percent in the following months through November.
Investment Opportunities
The investment will be made while London, Europe’s most- active commercial property market since the start of the global financial crisis, is losing some of its allure as rising prices and prospects of a U.K. recession deter investors.
The city slipped to 10th place in a ranking of 27 European cities, according to a survey of more than 600 brokers, investors and money managers compiled by PricewaterhouseCoopers LLP.
“Asian investors with sufficient liquidity can seize the investment opportunity amid financial turmoil in Europe and the U.S.,” Lee said.
The 41-year-old credit union joined a group of investors that bought a San Francisco office tower occupied by Wells Fargo & Co. in 2010 for $333 million in the city’s biggest commercial property deal in three years.
Other South Korean funds have also been seeking out property assets overseas. Korea Investment Corp., the nation’s sovereign wealth fund also known as KIC, spent about 70 million pounds ($111 million) in December to buy a building in London’s financial district.
Scott Kalb, chief investment officer of KIC, said in an interview last month that European assets are “attractive” and he may buy more real estate.
Unhealed Wounds
“The global financial market is at a state where wounds are yet to be healed, but we don’t expect another huge crisis,” Lee said, adding that the union aims for a 5.9 percent return from its investments this year.
The credit union that looks after the nation’s teachers and other school employees is targeting to increase overseas investments to 6.8 percent of its holdings this year from 4 percent in 2011, according to a statement on asset allocations on Jan. 10.
It will cut Korean bond holdings to 28.6 percent from 30.3 percent, while boosting those in stocks to 12.5 percent from 10.1 percent.
“A majority of our investment is still in financial assets, and we seek to diversify as bond yields are low and stock markets volatile,” Lee said.
bloomberg.com
The credit union will visit the site this month and may team up with three or four Korean institutional investors to buy the property worth 299 million pounds ($471 million), said Lee Kun Ho, executive director at the Seoul-based organization that provides loans and insurance to its members. He declined to identify the tower as he’s still in talks.
“The price is still attractive enough for us to earn around 6 percent annually, and possibly further returns upon selling the building after a few years,” Lee said in an interview on Jan. 31, adding that prices for some properties are falling as banks put more buildings that were repossessed earlier up for sale to increase liquidity.
The credit union is planning its purchase as a two-year recovery in U.K.’s commercial property values petered out in the second half amid Europe’s sovereign debt crisis.
The average value of the nation’s commercial real estate dropped 0.02 percent in November from October, the Investment Property Databank said last month. Values fell 44.1 percent from June 2007 to June 2009 and then rose by 17.9 percent in the following months through November.
Investment Opportunities
The investment will be made while London, Europe’s most- active commercial property market since the start of the global financial crisis, is losing some of its allure as rising prices and prospects of a U.K. recession deter investors.
The city slipped to 10th place in a ranking of 27 European cities, according to a survey of more than 600 brokers, investors and money managers compiled by PricewaterhouseCoopers LLP.
“Asian investors with sufficient liquidity can seize the investment opportunity amid financial turmoil in Europe and the U.S.,” Lee said.
The 41-year-old credit union joined a group of investors that bought a San Francisco office tower occupied by Wells Fargo & Co. in 2010 for $333 million in the city’s biggest commercial property deal in three years.
Other South Korean funds have also been seeking out property assets overseas. Korea Investment Corp., the nation’s sovereign wealth fund also known as KIC, spent about 70 million pounds ($111 million) in December to buy a building in London’s financial district.
Scott Kalb, chief investment officer of KIC, said in an interview last month that European assets are “attractive” and he may buy more real estate.
Unhealed Wounds
“The global financial market is at a state where wounds are yet to be healed, but we don’t expect another huge crisis,” Lee said, adding that the union aims for a 5.9 percent return from its investments this year.
The credit union that looks after the nation’s teachers and other school employees is targeting to increase overseas investments to 6.8 percent of its holdings this year from 4 percent in 2011, according to a statement on asset allocations on Jan. 10.
It will cut Korean bond holdings to 28.6 percent from 30.3 percent, while boosting those in stocks to 12.5 percent from 10.1 percent.
“A majority of our investment is still in financial assets, and we seek to diversify as bond yields are low and stock markets volatile,” Lee said.
bloomberg.com
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