Government-Designated 'Innovative Financial Services'... Real Estate Fractional Investment Platforms [Practical Financial Techniques]

Just as stocks can be easily traded on smartphones, real estate fractional investment is also conveniently conducted at your fingertips. As the real estate fractional investment market grows, various platforms have already been launched. Each platform has its own characteristics, such as allowing investment only with personal capital without loans or limiting investments to real estate in specific regions, so investors can choose according to their preferences.

Kasa Korea’s ‘Kasa’ is regarded as a pioneering platform in the domestic real estate fractional investment market. It was designated as an innovative financial service by the Financial Services Commission in December 2019. It owns and invests in shared equity securities (DABS) of real estate trusts for commercial properties. Those who wish to invest apply for public subscription for buildings scheduled to be listed and receive shared equity on a first-come, first-served basis. Subsequently, investors receive quarterly dividend income according to their shared equity and can also expect capital gains upon sale.

In the case of Kasa, investment is possible only with one’s own capital without loans. Therefore, the total building value tends to be smaller compared to other platforms, but it is also evaluated as having high stability. Since 2019, Kasa has successfully sold out public offerings for five buildings including ‘Jewel Tower’ and ‘Yeouido Excon Venture Tower,’ and is known to be generating steady income without vacancies. As a Financial Services Commission regulatory sandbox project, it allows broad investment without regional restrictions. Additionally, Kasa is preparing to enter the overseas real estate market. It plans to launch a Singapore exchange in the first half of this year, which is expected to open the door to easy overseas real estate investment.

Lucent Block’s ‘Soyu’ was designated as the second innovative financial service after Kasa Korea in April last year. Similarly, investors receive monthly dividends from rental income of the invested building. Building sales are conducted through owner voting, and capital gains are distributed according to shares. Securities can be traded like on the Korea Exchange, and trading is possible per share like stocks, offering faster liquidity compared to other platforms.

‘VBrick’ was created under a regulatory exemption led by the Ministry of SMEs and Startups and operates as a real estate collective investment and profit distribution service in the Busan blockchain regulatory free zone. Technically, it is the first STO (Security Token Offering) type trading platform launched domestically. Investors can invest in real estate products with small amounts and receive rental income distribution proportional to their owned securities. While other platforms only allow investment in physical real estate, VBrick also offers loan-type fund products. Loan-type fund products operate for a short period of about six months to one year, with high expectations for short-term returns. Investment through loans is also possible, differing from Kasa’s model which only allows personal capital. However, VBrick is currently operating as a pilot service only in the Busan area.

Fractional investment platforms are perceived to have weaknesses in consumer protection measures such as disclosure obligations and are considered risky, but ‘Funble’ is a platform aiming to dispel these concerns. Funble states that it "provides an optimal environment so that anyone can trust and invest" and "shares investment information with investors through transparent disclosures."

Designated as an innovative financial service through the Financial Services Commission’s regulatory exemption in May last year, Funble emphasizes that "investment funds are separately deposited at securities firms and safely protected." The trading method is similar to securities firms’ mobile stock trading systems (MTS), allowing those with stock investment experience to trade in a familiar way.