An increasing number of Korean institutional investors are eyeing multifamily housing in the U.S. as an alternative investment destination amid soaring rent and home prices there, according to industry officials, Monday.
Multifamily housing refers to upscale residential properties operated as rentals rather than for sale. These assets are considered relatively less volatile during economic downturns compared to commercial properties.
The Public Officials Benefit Association, a Seoul-based institutional investor managing funds for local government officials, formed a joint venture with the California State Teachers’ Retirement System in February 2022 and has sought stable rental income by investing in U.S. multifamily housing. The committed investment amounts to about 240 billion won ($166.4 million), with properties in Silicon Valley, Los Angeles, Boston and Miami.
Korea Investment Corporation (KIC), the country’s sovereign wealth fund, has also been consistently investing in multifamily assets through funds each year.
“Since the COVID-19 pandemic, sector differentiation in the global real estate market has become more pronounced,” a KIC official said. “We see the multifamily sector as having strong structural growth potential in the mid to long term and are actively seeking investment opportunities.”
The private sector is also showing strong interest.
Real estate development firm Hospitality Management Group recently acquired a luxury mixed-use residential complex in Miami for $190 million through its subsidiary Consus Asset Management. The firm plans to continue its strategic focus on overseas multifamily assets as part of its expansion.
Historically, multifamily properties were not a major investment focus for Korean institutional investors, who primarily allocated their overseas real estate investments to commercial properties such as offices, retail spaces and logistics centers.
However, since COVID-19, investment demand for office properties has declined sharply. Rising vacancy rates due to the expansion of remote work, coupled with higher interest rates, have significantly reduced investor interest.
Source: Korea Times
