Chairman Cho Yong-byoung of Shinhan Financial Group (left) shakes hands with Vice Chairman Chung Seo-jin of Asia Trust after signing an agreement allowing Shinhan Financial Group to take over a 60 pct stake in Asia Trust. (Photo: Shinhan Financial Group)

Shinhan Financial Group took over Asia Trust and officially launched its operation in the real estate market to become the third financial group in the country, joining KB Financial and Hana Asset Trust, pending the official approval from financial authorities.

With the real estate market having been reformed with financial companies leading the market, customers now will be able to get integrated financial services including loans and advises in connection with their real estate deals. Financial sources and IB companies said the financial group took over 60 percent of the outstanding shares of Asia Trust for 160 billion won and reported the deal to financial regulators and its board of directors on Oct. 22.

If Asia Trust officially agrees with the deal, the board of directors of Asia Trust and Shinhan Financial will make moves to approve the deal on Oct. 31 so that the two firms can go ahead with the share purchase agreement to conclude the takeover.

 Shinhan will have the option to purchase the remaining 40 percent of the stake in Asia Trust in two to three years.

The commercial real estate transaction volumes of South Korea in 2017 is estimated at 16.2 trillion won on a preliminary basis, hitting record highs for three consecutive years between 2015 and 2017, backed by the continued strong capital inflow to the market.

Office investments accounts for more than 60% of total volume in the last ten years, except in 2015 when a national-wide portfolio of Homeplus, one of the country’s top three retailers, was transacted at 7.2 trillion won.

Moreover, the share of Seoul, the country’s capital city, has represented more than 70% of the total transaction volume, except in 2015 for the same reason. Few transactions are found in the residential sector, as the institutionalized rental house business is not well established in the market.

Seoul’s commercial real estate transaction volume for the 12 rolling months ended in December 2017 was $9.2 billion on a preliminary basis, decreasing by circa 15.6% on a year-on-year basis. It ranked fourth amongst Asia Pacific cities, after Hong Kong, Tokyo and Shanghai, but higher than Singapore and Sydney.

The acquisition activity of cross-border investors remained active in Seoul with a 18% share in the total volume, though it was over 40% in the other cities such as Shanghai, Melbourne, Yokohama and Brisbane.

In 2017, the United Kingdom became the largest investment destination for cross-border investors with $33.5 billion inbound transaction volume, followed by the United States, Germany, the Netherlands and France. Being one of the key real estate markets in the Asia Pacific region, South Korea struggled to draw more investments from cross-border investors in 2017.

The country ranked 16th globally with $2.3 billion inbound real estate investments, positioning itself behind Czech, Sweden and India, and ranked sixth in the Asia Pacific region.

Shinhan Financial Group has roots that date back to 1982 when Shinhan Bank became the first bank in the country to be founded solely with private funds. Since then, we have paved the way forward for Korea’s financial industry.

During the height of the financial restructuring brought on by the 1997 foreign currency crisis, Shinhan turned crisis into an opportunity and in 2001, established the first privately held financial holding company in the country.

That was our first step toward becoming an integrated financial services group. Subsequent success in expansion and diversification strengthened our standing as Korea’s leading financial group. Now with a presence in 20 countries worldwide, including Asia, Shinhan is poised for new challenges.

The group is strengthening its overseas presence, bolstering its operating bases in Japan, the U.S. and European countries as well as in China, Vietnam and Kazakhstan – regions in which South Korean companies are operating.