[Market Insight] CEO Hong Jaegun: "Korean Real Estate Fractional Investment Will Be Transplanted Worldwide"

May 'Grain Boundary Building' Contest
Real Estate and Finance Synergy Expected
Goal to List 10 Buildings This Year

Kasa Korea, acquired by Daishin Securities last March, is a leading company in fractional real estate investment in South Korea. As the country's first fractional real estate investment firm, Kasa Korea sparked a boom in fractional real estate investment in 2018 with the slogan "You can become a building owner with just 5,000 won," and has conducted seven public offerings domestically to date. In May this year, it plans to hold a public offering for the "Grain Boundary Building" located in Sinchon Myeongmul Street, Seoul. Although it has mainly handled commercial real estate in Korea so far, it has ambitions to enter the Japanese real estate market, where its parent company Daishin Securities has strengths.

Hong Jae-geun, CEO of Casa Korea. Photo by Yongjun Cho jun21@

Hong Jae-geun, CEO of Kasa Korea, recently told Asia Economy, "In fractional real estate investment, we are considering market entry by taking into account the macroeconomic conditions of various countries such as Japan and the United States, not just Korea." He added, "Japan's commercial real estate and housing markets are both booming, so we believe there is market potential. Based on our success in Korea, we see no difficulty in transplanting the Korean model globally and plan to expand overseas in the future."

In line with climate change trends, Kasa Korea is also considering entering related markets to enable individuals to invest in carbon emission rights, which have been difficult to access until now. He said, "We continue to receive proposals for overseas expansion related to carbon emission rights and renewable energy. Although we are not currently at the stage of commercializing these, we are steadily studying climate change trends, characteristics, and regulations of overseas markets."

Kasa Korea is a platform that issues real estate digital asset-backed securities (DABS) based on buildings, allowing individual investors to trade them like stocks. After conducting public offerings for general investors, DABS trading takes place, and investors holding these securities receive rental income dividends proportional to their shareholding. When the building is sold, investors share the disposal profits according to their ownership ratio. Having joined Daishin Securities as its youngest affiliate just over a year ago, Kasa Korea has listed a total of seven buildings.

CEO Hong emphasized, "From Daishin Securities' perspective, which has portfolios in both real estate finance and traditional finance, acquiring Kasa Korea was a business worth pursuing head-on. Daishin Securities, specialized in risk management, as the owner of Kasa Korea, has the advantage of creating an environment where investors can invest with trust."

He led the entire process from A to Z of acquiring Kasa Korea while serving as head of the new business promotion team at Daishin Securities. Initially, Daishin Securities planned to appoint an external candidate as the first CEO after acquiring Kasa Korea. However, there was consensus that CEO Hong, who embodies Daishin Securities' DNA and knows Kasa Korea inside out, was the best fit for the position.

The Grain Boundary Building, scheduled for public offering in May, is the second product launched since he became CEO. This building in Sinchon is valued at 2.1 billion won. He said that when selecting properties for public offerings, location is the first consideration. CEO Hong stated, "Location is the brand itself. Fractional real estate investment adds the experience of seeing and passing by tangible real estate assets."

In commercial real estate, location, or land value, is crucial. Therefore, he carefully examines the building’s location, commercial district, and relationship with the surrounding area. CEO Hong said, "I hope the store listed on Kasa (Grain Boundary) grows into a local landmark, revitalizes the commercial district, and contributes to the local economy in a virtuous cycle. We aim for a story and brand where tenants grow together."

Kasa Korea is in its seventh year since establishment but has only eight public offering properties so far. This is because it carefully evaluates the intrinsic value of each property before selecting public offering products. While maintaining this consistent approach, it plans to focus on quantitative growth this year. He expressed his ambition, saying, "We are thinking big about Kasa’s total public offering amount (AUM) and hope to set a generous target within the year. The goal is a public offering amount of 1 trillion won and listing up to 10 buildings within the year."

To achieve this, they plan to add 'content' elements that allow investors to enjoy the fun and small pleasures of fractional real estate investment. Each building will be imbued with various 'stories' through tenants or location factors to make fractional investment itself enjoyable.

They also plan to diversify assets in the future. Currently, Kasa Korea is conducting a special case as an innovative financial service provider in Korea with trust beneficiary certificates. CEO Hong said, "Although real estate is the main model, once this model is established, assets are expected to diversify in the trust beneficiary certificate model as well. It would be good to expand into safer and more reliable asset classes after demonstrating stable performance in real estate and increasing public trust."