Three out of 10 wealthy Koreans prefer to invest in real estate assets like office buildings or stores which yield steady rental profits despite tough economic times, according to a survey.
KB Financial Group surveyed 400 Koreans with at least W1 billion (US$1=W1,146) in assets and found that 30 percent favor real estate as their investment destination, followed by stocks (20 percent) and bank deposits (12 percent). Sixty-nine percent of those who named real estate favor commercial buildings.
Other types of real estate investment are studio flats (41 percent), residential apartments (38 percent), office buildings (13 percent) and low-rise housing units (5 percent).
"Although the real estate market is stagnant, rich investors are growing more interested in buying property to seek steady rental profits," KB said.
The wealthier people are, the more real estate they have. People with assets between W1 billion and W5 billion split them almost half and half between real estate and financial products. But among those with over W10 billion, real estate made up 78 percent of their holdings.
A majority of wealthy Koreans, or 69 percent, feel they need at least W10 billion worth of assets to be considered rich. Only 28 percent said W5-10 billion is enough to be considered rich.
The average annual income of those surveyed was W412 million, around nine times more than the average household income of W47 million. But they spend W10.5 million a month, four times more than the average household. Only their spending on private education for their children is eight times higher.
KB analyzed data from the National Tax Service and Statistics Korea and found that the number of rich people rose 9 percent from 130,000 in 2010 to 142,000 in 2011. Seoul is home to 68,100 or 47 percent of the rich people, with 26,000 of them living in the affluent Gangnam area south of the Han River.
Gyeonggi Province is the next most popular home for the rich with 26,500, followed by Busan (11,700), Daegu (6,100) and South Gyeongsang Province (4,600).
Compared to 2009, the proportion of rich people in Seoul fell 1.7 percentage points in 2011, while the proportion in Busan, Ulsan and South Gyeongsang Province rose 0.9 percentage points. "This shows that the real estate market in Seoul is more stagnant than those in provincial cities," KB said.