Seowonju, NPS CIO, Embarks on European Business Trip
Seeking New Investment Destinations in Madrid, London, and More
Military Mutual Aid Association Launches Fund Worth 100 Billion KRW
Domestic institutional investors (LPs) such as pension funds and mutual aid associations are expanding their investments in real assets, including real estate and infrastructure. As both domestic and overseas real asset markets show gradual signs of recovery amid expectations of interest rate cuts and a rebound in demand, these investors appear to view this as an opportune time to invest.
According to the financial investment industry on May 30, Seo Wonjoo, Chief Investment Officer (CIO) of the National Pension Service (NPS) Fund Management Headquarters, visited Madrid, Spain, as well as London and Edinburgh in the United Kingdom from May 11 to 17 to conduct on-site due diligence on infrastructure and real estate investment assets in Europe. The purpose of the trip was to review the status of investment operations and to seek new investment regions and sectors.
In Madrid, Seo met with Greystar, a real estate asset management firm, and Asterion, an infrastructure investment company. In London and Edinburgh, he met with global infrastructure managers such as Global Infrastructure Partners (GIP) and Ardian to discuss investment strategies and potential cooperation. Accompanying Seo on the trip were the head of NPS Infrastructure Investment, the European Infrastructure Investment Team at the London Office, and the European Real Estate Investment Team.
Seo's decision to embark on another business trip just four months after visiting Australia in January to explore new infrastructure investment opportunities is closely related to the analysis that the European real estate market has entered a phase of investment recovery. A report published last month by IGIS Asset Management stated, "There is a growing perception among investors that asset prices in the European commercial real estate market have bottomed out, leading to expectations of a gradual recovery starting this year."
By sector, the report projected that offices would yield a return of about 6% through 2026-2027, while logistics would generate returns of around 8% from 2025 to 2027. For retail, which had undergone adjustments due to the spread of e-commerce, the report anticipated that investment opportunities would emerge, particularly focused on distressed assets. Regarding investment regions, the report noted, "The UK commercial real estate market is showing an unusual increase in transactions, leading the recovery of the European market. Alongside the inflow of global capital, structural demand for logistics and multifamily assets is expanding, heightening expectations for market recovery."
The Military Mutual Aid Association is also actively pursuing real estate investments. The association has decided to establish a domestic real estate development blind fund worth 100 billion KRW. It plans to select two external managers and invest 50 billion KRW in each.
Until now, the association has participated in real estate development projects through 'project funds,' which allocate capital to individual projects. However, for the first time, it has introduced a 'blind fund,' allowing managers to autonomously select investment targets. The blind fund offers advantages such as enabling autonomous and swift investments in response to market conditions and diversifying investments across various projects, which is beneficial for risk management.
An industry source from the financial investment sector stated, "As the base rate and market interest rates have passed their peaks and entered a downward phase, a gradual cyclical shift in the real estate market is expected. While new supply is declining due to increased construction costs and higher financing expenses from rising interest rates, profitability is anticipated to improve thanks to government policies, making it possible to generate returns."
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