Index
Korea
Where Success Knows No Limits
Real Estate
1. IndustryOverview
3
2. Government Policies
18
3. Success Cases
19
Real EstateTrends of Korea -2014
Growing influence of foreign capital companies in Korea’s office market
Sales of large office buildings through foreign capital in 2014
※ Limited to: Area of 33,000 ㎡ or more
Source: Kyobo Reality, IB Industry, quoted from a “Money Today” article dated September 1, 2014
3
Real EstateTrends of Korea -2014
*GIC’s active investment in Korea’s logistic centers
Total investments of the GIC
KRW 700 billion
Bird’s-eye view picture of the Dukpyeong Logistics Center
upon completion
Total investments of TEMASEK
KRW 400 billion
Bird’s-eye view picture of Ansung Homeplus Logistics Center
4
*GIC (The Government of Singapore
Investment)
Real EstateTrends of Korea -2014
Hyundai Motor won the bid for KEPCO’s Gangnam Site
5
OfficeMarket
Status of transactions and newly supplied properties in 2014
Status of the office building market in Seoul (2014)
Source: Mate Plus
6
OfficeMarket
Foreign capital invested in office buildings in Seoul
Foreign capital invested in office buildings in Seoul
1377.5
1238.1
928
2011
800
2012
2013
2014
(Aug)
7
Source: Mate Plus
Real EstateFund (REF)
Changes in the REF market
Chronological status of increase
in real estate fund
Chronological status of
increase in total net asset
(As of June 27, 2014)
(As of June 27, 2014, Unit: KRW trillion)
Total net asset
Increased units
84
3.4718
46
2.2981
2.5725
66
25
317
342
2010
2011
1.8232
Increased units
real estate
Total number of Real
Estate funds
Funds
19
4.2472
24.2484
408
2012
492
538
14.1313
2013
2010
2014.6
16.4294
2011
26.0716
19.9012
2012
2013
2014.6
Source: Korea Financial Investment Association (KOFIA), KAREIT Report (summer edition, 2014)
8
Real EstateFund (REF)
Current status of REFs in Korea
Status of REFs (as of November, 2014)
Status
Established funds
Total 608 units, KRW 29.6098 trillion
Total net assets
KRW 29.7413 trillion (100% of established fund)
Overseas
144 units, KRW 8.36 trillion, 28%
Domestic
464 units, KRW 21.24 trillion, 72%
Public offering
21 units, KRW 1.18 trillion, 4%
Private offering
587 units, KRW 28.42 trillion, 96%
Invested area
Capital raise
Source: KORAMCO Market Review, January, 2015
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REIT
Changes in the real estate REIT market
Chronological status of
increase in total net asset
Chronological status of
increase in REIT
(As of June 27, 2014, Unit: KRW trillion)
(As of June 27, 2014)
Net increase
Existing REIT
Net increase
14
19
9
6
11.7876
2
86
80
71
Existing REIT
9.5291
80
7.6312
86
3.6297
8.2308
12.4388
4.1996
5.4002
5.9156
.6512
2010
2011
2012
2013
2009
2014.6
2010
2011
2012
2013
Source: Korea Financial Investment Association (KOFIA), KAREIT Report (summer edition, 2014)
10
REIT
Current status of REITs in Korea
Status of REIT (As of November, 2014)
Total amount of
assets being managed
Average amount of
assets
Status
Note
KRW 12.41 trillion
96 REIT in total
Excluding companies with assets below
KRW 161.1 billion
KRW 5 billion
Dominant type
Externally managed REIT
54 externally managed REIT
Listed REIT
18 companies
11 companies are dissolved or de-listed.
Source: KORAMCO Market Review, January, 2015
11
RetailMarket
Current status of Korea’s retail market
Convenience
store
Increasing # of
convenience stores &
non-store retail businesses
Stores sold in lots
increased 36% in H1 of
2014 YoY .
12
Retail sales in H1 of 2014
increased 2.3% YoY.
RetailMarket
Status of Korea’s retail market
Status and prospects of the retail market
269.7
276.1
Unit: KRW tn
263.9
259.8
249.5
2011
2012
2013
2014
2015
(Estimated)
(Forecast)
Note : *Based on net retail sales, excluding fuel expenses
Source : 2011 – 2013: Korea Statistics / 2016 – 2014: Expert forecasts
13
RetailMarket
Status of the outlet operation by company
Lotte
ShinsegaeSimon
Hyundai
Hyundai
E-Land
As of 2013, the company’s outlet sales recorded KRW 1.5 trillion, a 19.5% increase
year-on-year.


The company plans to operate eight outlets by 2020.
Targeting premium outlets, Simon Property Group and Shinsegae created a
joint-venture corporation, Shinsegae-Simon, with each taking a 50% stake in
the venture.
Annual sales of KRW 250 billion are expected for the company’s Gimpo outlet,
which is scheduled to open in 2015; KRW 730 billion for the Pangyo outlet and
KRW 120 billion for Garden Five.
The company operates 51 outlets in total: NC outlets (15), 2001 Outlets (8), New
Core Outlets (19), Donga Outlets (6) and Premium Outlets (3).
14
RetailMarket
Status of large discount stores
Source: MK Economy No. 1787, December 22, 2014
15
Hotel Market
Overview of hotels in Seoul
Undersupply of rooms due to the
increased number of foreign
visitors
Booming business hotels
(3 – and 4-star, reasonable price)
• Increased number of
foreign visitors
- 12 million people in 2013
- Chinese travelers increased 52.5%.
• Preferences
- 80.9% of travelers visited Seoul and
73.5% chose hotels for accommodations.
HOTEL
16
Shilla Stay
Lotte City
Westin Chosun’s business hotel
Nine Tree
.
.
.
Government Support
Free Economic Zone
<FEZ Occupancy Eligibility>
Free Economic Zone Occupancy Eligibility
17
Government Support
Measures to stimulate the local economy
Eased restrictions on resale and staying period
㎡
18
SuccessCases
Construction of the Incheon Bridge
Overview
Category
Note
Investor
AMEC
Nation
UK
Investment area
Songdo, Incheon
Size
USD 37.9 million
Result of investment

Incheon Bridge, the world’s 5th longest cable-stayed bridge, spans a 12.3 km distance.

AMEC will be maintaining Incheon Bridge for 30 years until 2039, collecting the toll.

The construction cost of Incheon Bridge will be recollected through Incheon Bridge Co., Ltd's 23% share of the
bridge.
19
SuccessCases
Legoland
Overview
Category
Note
Investor
Merlin Entertainments Group
Nation
Cheonan, Gangwon Province
Development area
1,291,434㎡
Size
USD 100 million
Result of investment
Legoland Deutschland

Legoland is expected to draw more than 2 million family tourists from both Korea and overseas annually.

The American Economic Research Association forecasts that Legoland Korea will be visited by about 2.443
million people in 2025, starting with 2.217 million visitors in 2017.
20
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