2 consecutive quarters of growth; investment at 0.7% of total assets

Insurers lead at 31.4 trillion won; banks 11.9 trillion won; securities firms 7.2 trillion won; North America dominates

EOD up 20 billion won; FSS vows continued soundness monitoring

Office buildings clustered in New York City [AFP]
Office buildings clustered in New York City [AFP]

The outstanding balance of overseas real estate alternative investments held by South Korean financial firms rose for a second consecutive quarter, according to new data.

The Financial Supervisory Service said Monday that the balance stood at 55.9 trillion won ($36.2 billion) as of end-2025, up 800 billion won from the previous quarter — extending a two-quarter streak of growth. The figure represents 0.7 percent of the financial sector's total assets of 7,737.9 trillion won.

Overseas real estate alternative investment refers to a strategy that generates returns by investing in foreign commercial assets — such as office buildings, logistics facilities and hotels — rather than traditional shares or bonds.

By sector, insurers held the largest share at 31.4 trillion won, or 56.2 percent of the total. Banks followed at 11.9 trillion won (21.3 percent), then securities firms at 7.2 trillion won (12.8 percent), mutual finance institutions at 3.4 trillion won (6.1 percent), specialized credit finance companies at 2 trillion won (3.5 percent) and savings banks at 100 billion won (0.1 percent).

By region, North America accounted for the largest share at 34.3 trillion won, or 61.4 percent. Europe came next at 10.1 trillion won (18.1 percent), followed by Asia at 3.6 trillion won (6.4 percent). Other regions — including Oceania, South America and Africa — accounted for 7.8 trillion won (14.0 percent).

Some 11.1 trillion won (19.8 percent) of investments are set to mature this year, with a cumulative 37.8 trillion won (67.6 percent) due by 2030.

On asset quality, of the 32.3 trillion won invested in single overseas properties, the portion subject to an event of default stood at 2.08 trillion won, or 6.45 percent. An event of default occurs when the creditworthiness of an investee property deteriorates to the point where lenders can demand early repayment, potentially resulting in losses for the investing financial firm.

After falling for three consecutive quarters, the EOD balance rose 20 billion won quarter-on-quarter in the fourth quarter as new defaults emerged at some properties. By asset type, mixed-use facilities recorded the largest EOD exposure at 1.52 trillion won, followed by office properties at 400 billion won.

The FSS plans to continue monitoring overseas real estate investment across the financial sector and reviewing the adequacy of loss recognition as part of ongoing soundness management.

"The overseas real estate market is maintaining a gradual recovery based on major countries' price indexes, but the pace of recovery varies by region and asset type," the FSS said. "With uncertainty remaining — including the growing possibility of global interest rate hikes driven by recent inflationary pressures — there is a need to focus on risk management."


psj@heraldcorp.com