South Korean retail investors boost REITs ETF purchases

South Korean retail investors significantly increased their holdings in REITs (Real Estate Investment Trust) ETFs during early September. Despite rising government bond yields, net purchases of 14 domestic REITs ETFs reached 29.8 billion won, a 44.4% increase compared to August.

Investment in specific products like the ‘TIGER REITs Real Estate Infrastructure’ ETF rose by 29.4% month-on-month. Analysts suggest this trend may be driven by investors perceiving that bond yields have peaked and that REIT prices are currently at a low point. Additionally, increased market volatility has encouraged investors to seek asset diversification through these high-dividend financial products.

While rising interest rates typically increase debt burdens for REITs, some experts note that if economic recovery leads to higher rents and property income, the fundamentals could offset interest costs. Analysts from NH Investment & Securities and Shin Young Securities suggest that as interest rate uncertainty diminishes, focus may shift toward rental income and profit growth.