"Following the Successful Investments of the Wealthy: Should We Focus on Commercial Facilities?"

-Wealthy individuals with financial assets over 1 billion KRW: 8 out of 10 own one commercial property each
-Commercial real estate with excellent location and strong demand prioritized as investment... Active in the sales market as well

Wealthy individuals in Korea are showing great interest in investing in commercial real estate. In particular, the more financial assets they have, the more they tend to prefer 'commercial facilities' among non-residential real estate.

Based on a survey of 400 KB Financial Group customers with financial assets of over 1 billion KRW, the KB Financial Group Management Research Institute analyzed the status of wealthy individuals and released the '2020 Korea Wealth Report.' According to the report, 8 out of 10 wealthy individuals (80%) owned real estate other than their primary residence. Among ultra-high-net-worth individuals with financial assets exceeding 5 billion KRW, 6 out of 10 (60.1%) owned commercial real estate such as buildings and shopping centers. Those with financial assets over 3 billion KRW were more likely to own 'shopping centers (64.8%)' compared to 'general apartments (52.3%)' and 'land (50%).'

A real estate industry expert stated, "Wealthy investors generally prefer to invest prudently in locations with excellent accessibility and abundant underlying demand rather than taking excessive risks for high returns." He added, "This is because such investments are expected to have lower vacancy risks, generate stable rental income, and realize capital gains, which is why they actively maintain investments in commercial facilities."

In fact, commercial real estate with abundant underlying demand, preferred by most wealthy individuals, has emerged as a product with low vacancy risk and high investment value, sometimes selling out completely. For example, all 39 neighborhood living facilities of 'Hills Avenue Yeouido' in Yeongdeungpo-gu, Seoul, which were offered in June, were sold out on the day of the contract. Also, the shopping center within the 'Dongtan Lake Jayeon & Prugio' complex in Dongtan 2 New Town, offered in March, recorded a highest bid rate of 168% and sold out within a day of bidding.

A real estate industry expert said, "As housing regulations tighten recently, income-generating real estate such as commercial facilities is emerging as an investment alternative, and investors can expect higher returns compared to interest rates." He added, "Finding investment locations with prime sites that can generate stable income will be the main focus."

According to the Korea Real Estate Board, as of the first half of this year, the investment yield for medium-to-large shopping centers nationwide was 2.49%, which translates to nearly 5% annually. In contrast, the highest interest rate among savings products offered by commercial banks is 1.9%, showing a noticeable difference compared to the returns on commercial facility investments.

Amid this, commercial real estate located in prime locations is attracting attention.

Geumseong Baekjo will launch 'Daegu Technopolis Avenue Swan' in the RC block of Daegu Technopolis, Yuga-eup, Dalseong-gun, Daegu, in November. This commercial facility, part of 'Daegu Technopolis Yemi Ji The Central,' will be developed with a total floor area of 42,581㎡ from basement level 1 to ground level 3. It will apply the vibe of New York Manhattan and will be the first complex themed street mall within Daegu Technopolis. Being located within the 'Daegu Technopolis Yemi Ji The Central' complex, it can secure a fixed demand from 894 households in the complex, and it is highly likely to attract floating demand from resident companies and universities within Daegu Technopolis. Positioned at the gateway to Daegu National Industrial Complex and Technopolis Industrial Complex, it is expected to have significant demand from nearby workplaces. Additionally, large-scale industrial complexes such as Nexen General Industrial Complex and Dalseong 1st and 2nd Industrial Complexes nearby provide the advantage of securing a large floating population.

Hyundai Construction and Yurichi Construction are currently selling 'Urban Grove Godeok' in Ebc-1 block of Godeok Internationalization Planning District, Pyeongtaek-si, Gyeonggi-do. The commercial facility spans from basement level 1 to ground level 3, with a total floor area of 60,521㎡ and 585 stores. It is the largest commercial facility supplied in Godeok International New Town and is notable for being the first 'themed village mall' introduced in the area. It is a complex commercial facility combining outdoor, indoor, and terrace spaces, designed in a 'village' style distinct from plaza shopping centers and street malls.

HDC Hyundai Development Company has completed sales of residential units in 'Unjeong I-Park The Terrace' and is currently selling commercial facilities. This commercial facility, located at 1411 Wadong-dong, Paju-si, Gyeonggi-do, consists of 30 units ranging from 21 to 76㎡ in exclusive area. It is a street-type commercial facility approximately 190 meters long along a main road, offering excellent visibility, with all units on the first floor, making it advantageous for attracting foot traffic. Additionally, it adjoins the 490,000㎡ eco-friendly Unjeong Lake Park, connected to park walking trails, which is favorable for attracting visitors. The park includes a complex cultural experience space called Ubi Park, an ecological experience center Ecotorium, and a rose garden.

Geumgang Housing is selling 'Covent Garden Dongtan' in block 14 of Dongtan Techno Valley urban support facilities in Dongtan 2 New Town, Gyeonggi-do. The facility spans from basement level 1 to ground level 2, with a total floor area of approximately 22,484㎡ and 227 units. It is a complex commercial facility housing the ultra-large knowledge industry center 'Geumgang Penterium IX Tower' and the dormitory 'IX Stay,' offering the advantage of abundant underlying demand.

Dongmoon Construction is selling 'Munsuro Dongmoon Good Morning Hill Square' in the area of 1165-3 Sinjeong-dong, Nam-gu, Ulsan. This street-type shopping center consists of 44 units ranging from 9.01 to 44.82㎡ on floors 1 and 2. Designed with an open courtyard style, it is expected to attract abundant underlying demand, being located in a core area not only for fixed demand from complex residents but also within a densely populated residential area of about 19,000 households.