THE LATEST.
L.A. Housing Gets Hot With Korean Investors
By Jacob Adelman
Associated Press
Posted 1/13/2007
Far from her home in South Korea, Choung Yang-suk just bought a condo in Los Angeles, where she plans to retire in a few years to be near her two grown children.
Choung is among a growing number of Koreans scooping up real estate in the United Sates and elsewhere after the overseas investment cap in their country was lifted.
Koreans are expected to invest early $2 billion in U.S. residential property in 2007, up from $1.27 billion in 2005 when such investments were mostly limited to large Korean corporations, said Brian Shaffer of the International Real Estate Trade organization.
Worldwide, Koreans could spend at least $4 billion on overseas homes in 2007 as a result of the changes made in May that allow an individual to make as much as $1 million in foreign investments, analysts said.
Many of the purchases are being prompted by the strength of South Korean currency - the won, pronounced like "one" in English - against other currencies, analysts said.
Much of the money will likely be directed to U.S. cities with large Korean populations, including San Francisco, New York and Atlanta as well as Los Angeles, to take advantage of the weakening U.S. housing market.
Observers said the lion's share of the money will be invested in Los Angeles, with its large Koreatown and one of the world's largest Korean populations outside the Asian nation.
"It could very well release a tidal wave of investment in Southern California, particularly Koreatown," said Peter Morrison, a demographer with the Rand Corp., who has studied home buying patterns among immigrant groups.
Investors are snatching up properties as long-term investments or as future homes for themselves.
For Koreans with family members in Koreatown, buying homes in the district two miles west of downtown Los Angeles is particularly attractive. The swath of five square miles features hundreds of Korean-owned businesses. Few English-language signs are visible along the wide boulevards.
"Koreatown is very convenient for me since I only speak Korean," Choung said through an interpreter. "This is where my people live, and I can go to the market or shops without speaking English."
Southern California also has an abundance of banks and brokers catering to Koreans to aid in purchases.
One Koreatown-based lender, Wilshire State Bank, created a special division for overseas borrowers and has closed its first mortgages since the investment caps were lifted, bank executive Gene Sheen said.
Sheen met the borrowers at investing seminars he stages in Korea.
Until May, Korea enforced tight investing rules to stem capital flight after the Asian financial crisis of 1997. Only large firms and individuals with special permits could buy property abroad.
But with South Korea's won now near nine-year highs of about 930 to the U.S. dollar, government officials have decided to encourage Koreans to spend money abroad, hoping to take some air out of the currency to benefit exporters.
This year Korean officials intend to allow citizens to incest as much as $3 million in overseas property. If President Roh Moo-hyun gives his approval, caps would be dropped altogether by 2009.
That could free up even more potential buyers for the roughly 1,500 condo units now on sale or planned as part of a Koreatown construction boom. Many of the units are part of high-rise complexes resembling condo complexes in South Korean cities.
The Martin Group, developers of the 1100 Wilshire building in nearby downtown Los Angeles, has sold about 40 units to Korean buyers since the investment caps were changed said Ki Ryu, a director for the company. Planners have overseas Korean investors in mind as they map out future condominium projects in Koreatown.
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