NPL Market and Forecast
Last updated
Last updated
In the real estate market sector, the insolvent bond market and the auction/short sale market have been prime interest from traditional real estate investors. Still, they are difficult to access due to extremely limited opportunity and sharing of information for private investor. Nevertheless, the size of the market has grown significantly due to financial institutions' systematic asset management and strict compliance with debt ratios. The NPL and auction/short sale markets have a tendency to grow when the economy recovers slowly, or individuals or companies are driven into dire situations in the face of an economic downturn. For this reason, it is referred to as a 'market that thrives in recession'. Until now, institutions and large investors have played a major role in the NPL market, but now with the steady growth in the market, it is time for new players to come in and take on a role.
The start of the NPL market in Korea dates back to October 2009, during the global financial crisis. The largest non-performing loan investment company (UAMCO) was established by six major commercial banks (Shinhan, Kookmin, Hana, Corporate, Woori, Nonghyup Bank) and is maintaining a market sharesmore than 40% of the total non-performing loan market. In addition, Hana F&I and Daishin F&I account another 40% of the total domestic market, so to successfully settle in this market, collaborating and maintaining a good relationship with domestic NPI investment companies such as UAMCO, Hana F&I, and DaishinF&I , namely 1 tier, are important.
As mentioned above, the global real estate market is continuing to rise in the residential housing area. On the other hand, the commercial real estate market is on a short-term decline, but it is expected to draw a recovery curve from the second half of 2021. Amid this market environment, experts speculate that real estate prices will continue to rise. Nevertheless, recent investment approaches by private investors have lost opportunities due to rising hurdles and recent real estate policy changes.
With the current low interest rate trend and quantitative easing of the global FED, European countries and other financial powerhouses are maintaining the similar political stance, while South Korea also maintains a low interest rate policy with abundant liquidity injection into the financial market . The reality is that the market situation and policy direction are benefitting institutions and high-value asset managers.
Therefore, "ABP" recognizes these problems and seeks to provide various real estate investment opportunities through blockchain technology without barriers to entry, fair investment opportunities and creation of diverse participants to the market.
