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▲ A densely populated area of Seoul apartments viewed from 63 Square, Yeongdeungpo-gu, Seoul. Reporter Go Iran photoeran @ (E Today DB)
The government has come up with a plan to revitalize the public offering of REITs and real estate funds to provide quality rental housing to the middle class. REITs and real estate funds are financial products of an indirect investment method that collects investors’ funds and invests and manages them in the real estate sector or related capital and shares and divides the profits they generate to investors.
The industry points out that the expected rate of return is a criterion for investment judgment due to the characteristics of these products, and it is a contradiction to build public rental housing that offers a price below the market price.
On the 2nd, Hong Nam-ki, Deputy Prime Minister of Economy and Ministry of Strategy and Finance, chaired the eleventh meeting of connected ministers for the inspection of the real estate market at the government building in Gwanghwamun, Seoul.
At this meeting, Deputy Prime Minister Hong said, “We plan to expand rental housing supply for the middle class by revitalizing publicly offered REITs and real estate funds that use abundant market liquidity.” Through this, it is explained that it will provide indirect real estate investment opportunities to a large number of citizens and induce abundant floating capital in the market to the productive fields.
The government intends to design the facility in the direction of pursuing a reasonable balance between advertising and marketability of the rental housing supply. Indeed, it can be interpreted as a means of providing public rental housing in partnership with the private sector.
The investment was decided to focus on building leasing, which has the effect of a net increase in housing supply, rather than the leasing method for buying existing homes. The distribution system will be established in such a way that participants such as the public and the public, economic operators and financial investors share the profits.
Experts raise questions about the effectiveness of this government initiative. It is unfair to build public rental housing that is cheaper than the market price through REITs and fund investments, where profitability is the key.
It is emphasized that it takes at least several years to build and provide new rental homes by raising funds and investing, and is not effective in stabilizing the severe damage crisis at this time.
Lee Eun-hyung, senior researcher at the Korea Institute for Construction Policy, said, “The government has announced measures to provide rental housing with the word” public “in front.” There is a contradiction in putting the released funds on market in public housing which provides this rent at a lower than market price. “
“It is not differentiated from existing products that have already appeared on the private market but it has not been a box office,” he said. It would be reasonable to invest in shopping malls, etc. “
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