The price of REITs (real estate investment companies) stocks has fallen significantly this year only after the stock price recovery and interest rate hikes are completed . Some stocks have fallen nearly 20% since the beginning of the year. This can be attributed to the steep increase in interest rates, concerns over real estate project financing (PF), and real estate risks originating from China. The securities industry predicts that REIT stock prices will rebound after the interest rate hikes by central banks around the world are completed.
According to the Korea Exchange on the 31st, based on the previous day’s closing price, the ‘KRX REIT TOP 10’ index fell 6.07% this year. This is in contrast to the KOSPI index, which rose 14.64% during the same period. The REIT Top 10 Index is an index product that reflects the stock price trends of major domestically listed REIT stocks.
Among the listed REITs, the one with the largest market capitalization is SK REITs. SK REITs stock price fell 17.13% this year. During the same period, KB Star REITs stock price fell 18.08%. Mirae Asset Maps REITs fell 10.95%, Shinhan Western T&D REITs fell 8.37%, and NH All One REITs fell 3.53%.
REITs are an indirect real estate investment product that collects funds from investors and invests them in real estate and related securities, and returns profits earned from rent or sales to investors. It is considered a safe asset by investors because it holds real assets and has a high dividend yield.
However, looking at recent movements, it is not 스포츠토토safe at all. There is an analysis that the investment attractiveness of REITs as dividend stocks has decreased due to the increase in interest rates. Due to the nature of REITs, which require large amounts of funds to be refinanced, when interest rates rise, interest costs increase and profitability falls. According to the Korea REITs Association, the average dividend yield of listed REITs this year was 6.4%, down 1.4 percentage points from last year (7.8%).
Concerns that the real estate crisis that began with the default of Chinese real estate developer Biguiyuan (Country Garden) could spread into a financial crisis may also have a negative impact on domestic REITs. REITs’ stock prices also plummeted in October last year when concerns were growing about real estate PF insolvency triggered by the Legoland incident.
Experts believe that the recovery of REIT stocks depends on when the interest rate hike is completed. Federal Reserve Chairman Jerome Powell hinted at the possibility of further interest rate increases at the Jackson Hole meeting held on the 24th to 26th, but the market believes that the interest rate increase has actually been completed. Kim Joong-won, a researcher at Hyundai Motor Securities, said, “The Federal Reserve is giving signals of additional interest rate hikes, so the investment attractiveness of REITs can still be seen as being undermined. However, there is room for expectations for the end of interest rate increases to be reflected in stock prices.” .
Following the observation that the interest rate hike is virtually over, some say that now is an opportunity to buy REIT stocks at low prices. When interest rates are lowered, the REIT business environment improves because real estate loan interest rates go down and costs are reduced. Kim In-sik, a researcher at IBK Investment & Securities, said, “It will be difficult for the price increase to become clear in the short term, but there will be investment opportunities from a mid- to long-term perspective. Considering the possibility of a downward adjustment of interest rates in the future, the dividend attractiveness of REITs will also be highlighted again.” I looked ahead.
Typically, REIT stocks are affected by vacancy rates in addition to interest rates. This is because real estate rental income is directly related to REIT stock returns. However, in Korea, the vacancy rate has a relatively small impact on REIT stock prices. Most of the domestically listed REITs incorporate office buildings or distribution stores. Because office buildings are located in the Central Business District (CBD) and mainly sign long-term lease contracts of 5 to 25 years, the likelihood of large-scale vacancies is low. This year’s office vacancy rate in Seoul was 2.59% as of June, an increase of 0.27 percentage points compared to the beginning of the year (2.32%), but it remains low compared to the global office vacancy rate of 12.9% as of the end of March this year.
