[Real Estate Investment] Receive 1 Share with Just 5,000 Won... Earn Rental Income Like a Building Owner

Easy Investment Finance Service 'Kasa'
High Returns Are Difficult and Risky
Potential for Development Through Fintech Methods

[Asia Economy Reporter Moon Jiwon] An investment method that allows individual investors to easily buy and sell shares of core commercial area buildings in small amounts like stocks is gaining attention. The financial service 'Kasa' is the key player, enabling ordinary individuals to easily trade buildings, which have traditionally been exclusive investment assets for high-net-worth individuals due to their asset values reaching tens or hundreds of billions of won.

'Kasa' operates by listing buildings on the Kasa platform, similar to how companies are listed on a stock exchange. Individual investors can purchase 'Digital Asset-Backed Securities (DABS),' which represent shares of the building, and receive rental income benefits proportional to their ownership, just like building owners. Kasa values 1 DABS at 5,000 won, meaning that investing 5,000 won grants ownership of one building income security share.

Trust companies distribute rental income dividends quarterly to investors based on their securities holdings, and there are no restrictions such as lock-up periods or redemption limits on the securities. Therefore, investors can trade anytime on the platform exchange to realize capital gains. Although issuing real estate-backed ABS was originally impossible, the Financial Services Commission designated real estate-backed ABS issuance as an innovative financial service at the end of last year, temporarily exempting related regulations.

Depending on the DABS holding ratio, investors receive dividends from the building's rental income and can also gain capital gains by trading according to value fluctuations. The main advantage of Kasa is its ease of investment. Instead of buying expensive buildings outright, investors can invest small amounts in multiple buildings. DABS can be traded like stocks via an application, and rental income is paid every three months. The transaction fee is 0.2%, and income tax on capital gains is 15.4%.

Kasa launched its first public offering on the 25th of last month. The target building is the newly constructed 8-story 'Yeoksam Londonville' located in Yeoksam-dong, Gangnam-gu, Seoul. The public offering runs on a first-come, first-served basis until the 4th, with a total offering amount of 10.18 billion won. On the first day of the offering, over 5000 individual investors subscribed with more than 3.9 billion won in subscription funds.

(Photo by Casa Application Capture)

However, there are also drawbacks. First, the yield may not be as high as expected. Unlike Kasa, which invests in specific buildings, indirect investment in a broad range of real estate is different, but similar real estate indirect investment products like REITs also show relatively low returns.

Since this is Kasa's first listing, there is only one building available for investment, and the total issuance scale of asset-backed securities is limited to 500 billion won, so future investment buildings may remain small to medium-sized. The annual investment limit per investor is also restricted to 20 million won for general investors and 40 million won for qualified investors.

Although subscription funds were concentrated on the first day of the Yeoksam Londonville public offering, investor interest declined afterward, with a subscription rate of only 49% as of the morning of the 2nd. Even though the investment amount is small, risks exist, so caution is necessary. For example, if the invested building fails to find tenants and becomes vacant, dividends will not be paid, and investors may suffer losses due to a decline in building value.

One of the biggest advantages, 'easy buying and selling like stocks,' has not yet been verified. Since this depends on having many people willing to buy and sell DABS like stocks, it remains to be seen how much demand there will be. However, the market is optimistic as it represents one of the various investment options available to investors. As a 'fintech' method combining information technology (IT) and finance, it also has potential for development.

A Kasa representative explained, "The expected rental yield of Yeoksam Londonville, currently undergoing a public offering on Kasa, is 3% per annum, which is high compared to other buildings located in the core area of Gangnam, Seoul," adding, "Additionally, when the building is sold, DABS holders can share the disposal profits proportional to their holdings. Considering the significant rise in the official land price in Gangnam-gu, high returns can be expected."