SEOUL, April 3 (Korea Bizwire) — The portion of real estate investments by wealthy Koreans with more than 1 billion won (US$814,800) in financial assets has decreased over the past six years, according to a recent report.
The preference of index-linked products, which have been considered the most sought-after financial instruments by the rich, also dropped slightly as concerns of losses in high-risk financial instruments were highlighted.
KEB Hana Bank and the Hana Institute of Finance published the “2020 Korean Wealth Report” Thursday, reflecting such information.
The report is based on an analysis of a survey of about 400 Hana Bank private banking customers, with an average age of 68 and more than 1 billion won in financial assets.
Real estate accounted for 50.9 percent of the wealthiest people’s total assets last year, a slight drop from 53.1 percent a year ago.
The drop in the portion of real estate, which fell to 44 percent in 2013, marks the fourth consecutive year of increase from 2015 to 2018, before turning downward.
The move is seen as the result of slowing property price increases due to tightened regulations, with owners of multiple houses selling properties and gifting investments to save on taxes.
The attractiveness of index-linked financial instruments, which were favored by the rich, dropped slightly.
Compared to the previous year, products with higher preference were foreign currency funds and bank regular deposits, while index-linked products and private equity funds saw their popularity decline.
The institute explained that financial asset attractiveness declined last year due to concerns over massive losses in high-risk financial instruments, adding that worsening returns on these products negatively affected the preference for index-linked products.
“Although foreign currency assets and public property funds are gaining attractiveness as alternatives to index-linked products, the size of the products is not sufficient,” the institution said.
“As it is difficult to find alternatives, the preference for index-linked products among the rich seems to be temporary.”
M. H. Lee (email@example.com)