Korean financial firms’ investments in overseas real estate increased marginally by 0.3% in the three months to December 2024, despite the country’s financial regulator remaining cautious over the outlook of the global commercial property market.
According to the Financial Supervisory Service (FSS), total offshore real estate investments by Korean financial firms reached 56 trillion won (US$40.7 billion) at end-2024, up 200 billion won from 55.8 trillion won in September.
These overseas real estate holdings accounted for 0.8% of the firms’ overall investable assets.
“Although the global commercial real estate market has been on a recovery trajectory following the Covid-19 pandemic, concerns over economic slowdown and uncertainty about financing conditions have been hindering the pace of recovery of the market,” the FSS says in a statement.
Nevertheless, the regulator emphasised that the financial firms’ loss-absorbing capacity remains “robust enough” to prevent systemic risks.
“The FSS will facilitate its effort to improve regulations on the financial companies’ alternative investments and look strictly into whether they make investments based on the appropriate capability of investment management,” it says.
The FSS will also require financial firms to strengthen risk management practices for various asset classes and to implement loss recognition measures.
