Korea's REITs (real estate investment trusts) market has grown by more than 100 trillion won over 10 years and topped 120 trillion won this year.
According to the Korea REITs Association on the 17th, as of the end of July, there were 470 REITs in Korea with total asset of 127.3 trillion won. In 2016, 10 years earlier, there were 169 with 2.51 trillion won, so the number of REITs rose about 2.8 times and asset size about fivefold.
A REIT is an indirect real estate investment vehicle in the form of a joint-stock company governed by the Real Estate Investment Company Act. It pools funds from many investors, invests and manages 70% or more of total asset in real estate and other assets, and distributes revenue to general retail investors as dividends.
By law, REITs must pay out 90% or more of distributable income to investors as dividends. The government or local governments can also use REITs' capital raising to build and operate public and public-interest facilities such as rental housing.
As of the end of last year, excluding policy REITs, the average dividend yield of all REITs was 11.8%. As of the end of July, based on assets under management (AUM), market shares by investment type were ▲ dwellings (44.4%) ▲ offices (34.0%) ▲ logistics (6.5%) ▲ retail (6.4%) ▲ mixed (4.9%), in that order.
As of the end of July, the number of dwellings supplied through housing REITs totaled 221,084 units. Of these, 216,009 were rental dwellings such as public-support private rentals, and 4,775 units were supplied for sale. As of the end of July, there were 23 domestically listed REITs with a market capitalization of about 8.436 trillion won.
A Korea REITs Association official said, "REITs are highly useful for building and operating public and public-interest facilities such as rental housing and infrastructure, and can also help stabilize the real estate market by shifting speculative demand to investment demand."