Problem

Commercial Real Estate

Although the global real estate market, including Korea, is expected to rise, room for private investors is extremely limited. The Korean real estate market is raising various problems due to speculative factors and institutional difficulties. These problems hinder the supply and demand of the real estate market, for investment and real-ownership purposes, from having a seamless balance. For this reason, distributed ledger characteristics of blockchain technology and the asset liquidation characteristics of cryptocurrency are emerging as new solutions. Although the IPO (primary market) is triggering strong gains in the 2020 stock market, the real estate-based Security Token Offering (STO) market is only receiving continuous attention with no clear solution.

It is regrettable that the real estate market, which has been leading the domestic economy for many years as a strong traditional financial market with great collateral capacity, is not seeing the benefits of such a listing market.. "ABP" recognizes the following problems and ready proposes solutions to present a new paradigm in the real estate listing market through blockchaintechnology:

Problem 1. Individual trade restrictions

In the case of residential real estate in Korea, demand for transactions is concentrated in the Seoul metropolitan area, and there is a constant influx of speculative capital due to the gap in the changes of periodic real estate policies, and prices have been rising for years. The approach of real estate investment is too difficult for younger generations and individuals with low incomes, who cannot make even own a small nutshell in Gangnam. .. In the case of individuals besides institutional investors and high net worth individual, investment activities for generating profits are limited to apartment subscriptions and sales.

Furthermore, high real estate prices in proportion to local average income demand excessive personal burden due to LTV restrictions or it is hard to obtain even the base requirement capital for purchasing house. Moreover, transactions based on actual transaction on purpose of beneficial ownership are also slowing due to objection of taxation such as transfer income tax and comprehensive real estate holding tax. This makes it difficult for the working class to live in practical housing.

Problem 2. Systematic High Entry Barriers to Market

The reality of Korea's real estate market is that it is difficult for individuals to access high-yield investment opportunities such as commercial real estate and large private capital development projects due to high institutional barriers to entry. This is because tens, hundreds and hundreds of billions of high-end investments are accessible only to financial institutions with credit and certain licensed corporations set by the Financial Supervisory Authority.

Especially, high-end investment opportunities such as NPL and real estate implementation have existed as investments exclusively for financial institutions and high-net worth individual. This is difficult for individual investors to access due to the size and institutional constraints of the minimum amount of invested capital, and it is difficult to cover interest at large scale borrowing to raise capital for meeting minimum fund requirement.

Problem 3. Long-term maturity period and low profit structure

The Korean real estate market generally provides stable investment opportunities, but it maintains long investment holding period and low rental rate of return, and apartments are characterized by long-term retention largely due to principle residential purpose, while officetel and commercial real estate are skeptical as investment products since it’s in a slump.

Moreover, residential real estate is not suitable for investment because it cannot hold various assets due to strict real estate policies, but is the main culprit behind the creation of the market environment that causes speculation on residencial housing market due two-sided face of real estate policies In addition, institutional hurdles make it difficult to incorporate investment basket other than the purpose of possession, and the high debt ratio results in a high cost of carry whilefunds are tied up in the long-term.