M&G Real Estate makes first retail investment in Korea

London-based property investor M&G Real Estate has bought three retail properties in South Korea for a combined total of US$230 million.

The acquisition was made on behalf of its core Asia real estate strategy, managed by Singapore-based Erle Spratt and represents an average yield of 6.5 per cent.

Two of the properties house Lotte hypermarkets, located in the tourist city of Jeju and in Daejeon, South Korea’s fifth most populous city.

The third property is an outlet mall in Inchoen City, also leased to Lotte.

Hyesik Ryu, MD of M&G Real Estate Korea, said M&G was one of the first foreign institutional investors to enter South Korea when it bought into the country’s commercial office sector in 2004.

“M&G Real Estate has developed a deep understanding of the market, enabling us to make this latest investment in the retail sector, which will strengthen the strategy’s long term income stream.”

Stefan Cornelissen, M&G’s head of institutional business, Benelux, Nordics and Switzerland, said the Asia Pacific real estate market is now the second largest in the world and rivals the US and Europe in terms of maturity, transparency and liquidity.

“European investors in search of diversification can now benefit from Asia’s strong economic growth and attractive long term returns without going higher up the risk curve.

“We have recently had a significant commitment from Dutch investor, Blue Sky Group, which has invested on behalf of its recently launched Core Asia Pacific Fund. We expect further capital to follow from other UK and European investors,” said Cornelissen.

“Asian real estate has come of age and is earning itself a strategic place in a diversified core real estate portfolio.”

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