ANREV: Korean investors flock to RE debt

A survey of Korean investors revealed that 88% plan to invest in real estate debt over the next 12-18 months and 60% have expressed an interest in mezzanine loans.

Korean investors are becoming increasingly interested in allocating capital to the real estate debt market, according to a survey from industry trade body ANREV.

The survey, conducted at the ANREV Korea Conference, revealed that 88 percent of Korean investors plan to invest in real estate debt over the next 12 to 18 months and 60 percent have expressed an interest in mezzanine loans.

Korea Post in November last year expressed its desire to expand its real estate debt exposure. In an on-stage interview at the PERE Global Investor Forum in Seoul, Hee-Joong Kim, deputy director of the alternative investment division in the Savings Bureau of Korea Post, said he wanted to invest in the mezzanine debt financing and the commercial mortgage backed securities (CMBS) markets as a substitute to low-yielding bonds.

South Korea’s Government Employees Pension Service (GEPS) also plans to allocate to private debt funds and has issued a request for proposal to fund managers. GEPS will allocate around $50 million to $80 million each to two to three managers across credit-related opportunistic funds in the US and Europe.

The ANREV survey also found that Korean investors expect to deploy real estate capital fairly evenly between Asia (35 percent), the US (32 percent) and Europe (29 percent) in 2017.

Regarding investor interest in funds, 82 percent of respondents would consider investing in a fund: 42 percent of these will focus on funds in developed APAC markets, 31 percent on the US and 20 percent on Europe.

Core is the most popular strategy among Korean investors with 82 percent interested in the low-risk strategy funds, 33 percent in core-plus and 35 percent in value-add, but only 4 percent are keen on opportunity strategies.