According to FAP Group, an independent consultancy firm based in Germany and specializing in arranging and structuring of capital for property acquisitions and development projects, many large players in the German Real Estate market originated from South Korea are currently being held back by travel restrictions imposed by the COVID-19 pandemic, not being able to conduct business deals in their normal sense. As per survey conducted by FAP in November, many South Korean institutional investors, limited by the pandemic, are clashing with increased competition from local agents. The majority of South Korean agents require a physical examination of the property to finance, which is not possible at the moment. Certain processes to conclude deals are also difficult to perform without physical presence of the investor.
This, however, had no reflection on interest in German property market. As per FAP, once the travel restrictions are removed, many important investors will be rushing to reestablish their presence in the German market.
As per Hanno Kowalski, Managing Partner at FAP Invest: “South Koreans are still interested in the German real estate market. Our contacts claim that they want to get back to Germany as soon as possible and that they are already positioning themselves to do so. Their interest in conducting business in Germany continues to be shown in basic properties with big tickets at prime locations - in three simple words: "Big, first class and safe!"
Until the pandemic, South Korean investors were important providers of capital in the German real estate market, particularly - for large individual real estate transactions. However, in the current market, this also applies to loan portfolios, which combine various individual loans ranging from 20 million to 50 million Euros.
“Thus, these important investors can not only reach their target investment amounts in the three-digitmillion range but also profit from risk diversification,” explains Kowalski.
The demand for risk profiles, which could be better managed and monitored, is also on the rise, especially after loan defaults for individual properties within the UAS, in which Koreans are funding participants.