Korea Pension Fund looks to real estate to diversify

Kim said he couldn't comment on an Australian Financial Review report that the pension fund was partnering with private equity firm the Carlyle Group to buy Aurora Place, an office tower in Sydney, for A$700 million (US$655 million). Dorothy Lee, a Hong Kong-based spokeswoman at Carlyle, declined to comment.

“The fund appears to be focusing on commercial buildings in big cities and in good locations,” said Yu Jung-Suk, a research fellow at Samsung Economic Research Institute. “The timing is not bad from a long-term investment perspective.”

National Pension on Nov. 13 agreed to buy HSBC Holdings Plc's London headquarters for 772.5 million pounds (US$1.3 billion) as the fund boosts overseas assets, following investments in two other London office buildings earlier in the month.

The Korean fund, which announced in July it and the Carlyle Group will buy a Tokyo office building, said at the time it plans to invest directly in property in New York, London and other major cities after prices declined last year.

Values of offices in the City of London - the U.K. capital's main financial district, fell 50 percent from the market's peak in July 2007 to Aug. 31, according to Investment Property Databank Ltd.

National Pension had 270 trillion won (US$234 billion) of assets at the end of September, including 3.05 trillion-won worth of real estate holdings as of the end of August, according to its Web site.

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