In the late 1970s and early 1980s, the North Texas region attracted significant interest in commercial real estate from investors based in Canada. Approximately 40 years later, it is now investors from South Korean who are making significant purchases of commercial property in the region.
One of the earliest examples of this trend was one of the largest recorded real estate purchases in the North Texas region. It happened four years ago and involved teamwork between the Transwestern Investment Group in Houston and IGIS Asset Management, Hana Financial Investment Company in South Korea to purchase the four-tower State Farm Insurance office project for more than $800 million.
Some South Korean investors are looking for short holding periods on property they purchase in North Texas. For example, Shinhan Bank and Nonghyup Bank provided funds to South Korean investors to purchase KPMG Plaza in downtown Dallas four years ago in 2016. The investors recently sold the property for an estimated $240 million to Masaveu Real Estate, based in Spain. Five years between the time of purchase and the eventual sale is common for South Korean investors in the current market, but short compared to other international investors.
There are several qualities about the economic situation in North Texas that make commercial properties here attractive to South Korean investors. They can leverage attractive cash returns due to the debt market. The growth fundamentals in North Texas and the durable cash flow assets also appeal to them.
Last year, investments in commercial real estate nationwide totaled approximately $317 billion. Of that, foreign investments accounted for more than $63 billion. According to a new report, in 2019, total foreign investment in commercial property in the United States grew by approximately 25%. However, it is not clear how much of that involved investors from South Korea specifically. Investors from different countries tend to take an interest in different regions.