"US Apartment Rental Business Requires Attention"

Seunghwan Lee, Asia Representative of Bridge Investment Group

[Asia Economy Reporter Song Hwajeong] "Multifamily (apartment rental business) is considered the most stable asset in the United States."

Seunghwan Lee, Asia Representative of Bridge Investment Group, cited multifamily as a stable investment destination in an interview with Asia Economy on the 22nd regarding U.S. real estate investment. Multifamily refers to the business of purchasing entire apartment complexes for rental purposes. Lee explained, "In the case of offices, the value rises when large corporations move in, but companies often relocate after their lease period ends, causing high volatility. On the other hand, multifamily rarely experiences all tenants leaving at once, so it can maintain occupancy rates above 90%, resulting in relatively lower risk."

According to global real estate consulting firm CBRE, the multifamily vacancy rate in the third quarter of last year was 3.6%, marking the lowest level in 25 years, indicating continuous demand within the U.S. Recently, as many companies have relocated to regional cities, population growth in major metropolitan areas has slowed, while regional cities have shown clear population increases. Consequently, demand for multifamily housing in regional cities is also rising. Lee stated, "Recently, many large corporations have moved their headquarters to areas with lower taxes. Populations are relocating, and more people are moving to regions with favorable climate conditions, leading to an influx into areas such as Texas, Arizona, and Florida."

Domestic institutions are also actively investing in overseas multifamily properties. The Government Employees Pension Service invested in multifamily properties in Japan and the U.S. last year, and the Teachers' Pension also recently participated in a U.S. multifamily investment project.

Lee, who formerly served as Head of the Investment Strategy Division at Korea Investment Corporation (KIC), joined Bridge Investment Group, a U.S. real estate specialist investment firm, earlier this year. Established in 1991, Bridge Investment manages approximately $22 billion (about 25.6 trillion KRW) in real estate assets as of the second quarter of this year. The firm operates five offices in the U.S., including New York and San Francisco, with over 4,100 employees. Bridge Investment specializes in multifamily assets and focuses investments on high-growth emerging markets with strong population inflows, targeting sectors with high entry barriers and limited competition. Since the early stages of investment, it has provided annual cash dividends exceeding 6%, aiming for a net internal rate of return (NET IRR) of 9-13% according to its management strategy.

With Lee’s recruitment, Bridge Investment recently established its Asia regional headquarters in Seoul. It is unusual for a foreign investment firm to set its Asia base in Seoul instead of tax-advantaged locations like Hong Kong or Singapore. Especially considering that many foreign asset management firms and banks have withdrawn from Korea in recent years. Lee noted, "We are focusing on Korea's role as an Asian financial hub. It is adjacent to China, Japan, and Taiwan, has many talents fluent in Chinese and English, and possesses sufficient investment capacity." He added, "Through this Asia base, we will strive to provide investors in Asia?where low interest rates and aging populations are rapidly progressing?with opportunities to receive stable cash dividends from the early stages of investment and achieve excellent mid- to long-term returns."