South Korea to launch 3 trillion won Kamco Fund for real estate PF

South Korea's Financial Services Commission announced plans to establish a new 3 trillion won Kamco Fund by the first half of next year to stabilize distressed real estate project financing (PF) sites and expand housing supply. The fund will be composed of 1.5 trillion won in government finances and 1.5 trillion won in private capital.

Approximately 60% of the fund is designated for residential projects, which the commission estimates could support the supply of roughly 18,000 housing units. This initiative follows the success of a previous 1.1 trillion won fund, which has already invested 819.3 billion won to facilitate the supply of about 3,881 units.

During a site visit to a restructured project in Mapo-gu, Vice Chairman Kwon Dae-young highlighted a case where a 60.5 billion won investment from the existing Kamco Fund successfully revitalized a 300 billion won project. The project, which had stalled due to rising interest rates and construction costs, was restructured by changing its use from urban living housing to mid-to-small apartments, resulting in a 100% pre-sale rate.

Asset management professionals attending a related meeting suggested that the new fund should offer more flexible investment conditions, such as various execution methods including equity investments and loans, as well as incentives to encourage private capital participation.