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Popularity Declines Significantly with Double-Digit Drop Compared to Late Last Year

[Asia Economy Reporter Oh Ju-yeon] The popularity of REIT stocks, which saw double-digit returns last year, has cooled off this year, dropping nearly 20% from their peak at the end of last year.

According to the Korea Exchange on the 17th, Lotte REIT, which closed at 6,500 won on its first day of listing on October 30 last year, fell 14.46% to 5,560 won as of 9:30 a.m. that day. Amid last year's low interest rate base, it attracted attention with its high dividend yield of over 6% and government tax benefits, hitting the daily upper limit on its listing day. However, the stock price declined afterward, falling to 5,390 won (-17.07%) on January 28. Although the stock price rose 6.86% this month, it plunged again following a disclosure that Lotte Shopping would close about 200 of its 700 offline stores, including marts and supermarkets. Lee Min-jae, a researcher at NH Investment & Securities, analyzed, "This was due to vague concerns about Lotte REIT, which was expected to incorporate assets held by Lotte Shopping."

Shinhan Alpha REIT, which has Krafton Tower in Pangyo and The Prime Tower in Yongsan as its underlying assets, saw its stock price soar 65.18% over the year, from a closing price of 5,600 won on January 2 last year to 9,250 won on November 7. However, the stock price slid afterward as risk asset preference grew due to progress in US-China trade negotiations and expectations of global economic recovery. On this day, the stock traded at 7,420 won, down 19.78% from the high at the end of last year.

Other REIT stocks have also shown poor returns this year. Modetour REIT, a real estate investment company established by the domestic travel company Modetour Group in 2014, recorded a -4.17% return, falling from a closing price of 3,120 won on January 2 to 2,990 won on this day. E-Land Retail's operating store owner, IRITZ Core REIT, dropped from 6,780 won to 6,000 won (-11.50%) during the same period, and NH Prime REIT, which invests in four Seoul office-related securities including Seoul Square and Gangnam N Tower, fell from 6,100 won to 5,790 won (-5.08%).

Compared to the time of great interest last year, stock prices have all fallen, but there is an analysis that it is necessary to approach from the perspective of real estate investment requiring long-term investment rather than being shaken by short-term price fluctuations. In particular, there is also an expectation that the REIT public offering market will be revitalized as high-quality REITs following Lotte REIT and NH Prime REIT last year are preparing to be listed.

REITs currently pursuing listing include Aegis Value Plus Office REIT, KB Anseong Logistics REIT, Marston Investment Europe REIT, Koramco Energy Plus REIT, Shinhan Western T&D REIT, Twin City Namsan REIT, and Kendall Square REIT.

Lee Kwang-soo, a researcher at Mirae Asset Daewoo, emphasized, "Listings are planned not only for traditional office real estate but also for logistics, residential, and even gas stations," adding, "Considering the government's active support for REIT revitalization and regulatory policies on physical real estate, investor interest in REITs can continue to increase."