South Korea Financial Supervisory Service reports KRW55.5 trillion overseas real estate exposure and targets tighter review of office investment losses

The South Korea Financial Supervisory Service published an update on Korean financial companies’ alternative investments in overseas real estate, showing an outstanding balance of KRW55.5 trillion as of end-March 2025, down KRW0.5 trillion from three months earlier and equivalent to 0.8% of total financial sector assets. It also signalled closer supervisory attention to whether firms are appropriately recognising losses on office investment assets and conducting appraisals and assessments on a more timely basis, alongside work to improve risk-management regulation. Insurance companies held the largest share of overseas real estate investments at KRW30.3 trillion (54.6%), followed by banks at KRW12.1 trillion (21.9%) and securities companies at KRW7.5 trillion (13.6%), with smaller balances across mutual finance companies (KRW3.4 trillion), specialized credit finance companies (KRW2.0 trillion) and savings banks (KRW0.1 trillion). North America accounted for 62.1% of exposure (KRW34.4 trillion), with Europe at 18.5% (KRW10.3 trillion) and Asia at 6.7% (KRW3.7 trillion); 10.4% (KRW5.8 trillion) is set to mature in 2025 and 66.8% (KRW37.1 trillion) by 2030. Investments in individual properties totalled KRW32.9 trillion, of which 7.57% (KRW2.49 trillion) were exposed to events of default, with the related volume slightly down quarter-on-quarter as firms preemptively recognised losses; the release also noted that office-sector investments face further loss risk amid weakening structural demand and elevated vacancy rates.