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Investors flock to real estate funds, seeking stable, high returns

(Yonhap)
(Yonhap)

Investors have been increasingly turning to real estate funds, looking for low-risk, high-return investments, according to data on sunday.

Total investments in real estate funds stood at 99.39 trillion won ($84.90 billion) -- 96.19 trillion won for private equity funds and 3.21 trillion won for public funds -- as of Jan. 21, according to data released by the Korea Financial Investment Association, a nonprofit self-regulatory organization.

The figure has been on a steady uptrend over the years. The amount marked some 29.7 trillion won at the end of 2019, more than three times higher compared to 2014. It exceeded 99.38 trillion won at the end of last year, up 31.5 percent -- or 23.83 trillion won -- from the previous year.

The total net worth of real estate funds surpassed 100 trillion won for the first time in December last year to reach 102.22 trillion won.

Starting from 2017, the total investment amount in overseas real estate funds has outrun the volume of investments in local funds. As of Jan. 21, the volume of overseas real estate fund investments hit 54.58 trillion won, while that of locally traded funds reached 44.86 trillion won.

Real estate funds are a type of mutual fund investment that allows investors to choose quality real estate property both at home and abroad, either directly or via real estate agencies.

While the real estate fund market has gained popularity among investors in recent years, Korea’s stock market has been largely tepid, losing luster for some investors.

At the end of 2018, the total amount of money invested in stock-linked funds came in at 85.18 trillion won, nearly 10 trillion won higher than real estate funds. In the first half of last year, however, total investments in real estate funds surpassed that of stock-related funds.

By Jie Ye-eun (yeeun@heraldcorp.com)
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