Vol. XXI, No. 187 [ Business World Online ]
Thursday, April 24, 2008 | MANILA, PHILIPPINES
SEOUL — South Korea’s National Pension Service (NPS) has earmarked 800 billion won ($806.8 million) for overseas property purchases in 2008 as it steps up investment in distressed foreign assets, the fund said on Friday.
The world’s fifth-biggest pension fund, which expects its assets to rise to 250 trillion won by the end of this year, plans to diversify into stocks and other higher-yielding assets away from bonds that represented 80% of its portfolios in 2007.
"With a fall in property prices as a result of a slowdown in the global economy, we are finding more opportunities to buy low-priced assets and raise returns," Kwag Dae-whan, who leads the NPS’ overseas investment department, was quoted as saying by the fund PR team.
"This year, we plan to raise the portion of investment in the United States as a series of low-priced assets there are coming to the market."
The planned 2008 spending on foreign property will correspond to twice its 2007 investment in overseas real estate assets, after it initiated foreign property purchases in 2006 via investment funds.
NPS has bought office and commercial buildings, including logistics centers, and communities for senior citizens. This year it plans to expand into residential property.
NPS, which expects to be the world’s second-largest pension fund by 2012, is aiming for an about 8% return on overseas property purchases, or somewhere between stocks and bonds.
Real estate assets are part of the fund’s alternative investment portfolio, which includes infrastructure assets and commitments to private equity funds.
In 2007, the pension fund made $539 million worth of investment in overseas alternative assets, out of which real estate purchases accounted for less than half. — Reuters
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