Azerbaijan oil makes $447m Asia RE foray

The $34 billion oil sovereign wealth fund has acquired a prime office tower in Seoul in what was its first property investment in Asia.

The State Oil Fund of Azerbaijan (SOFAZ) has made its first foray into the Asian property market with the acquisition of Pine Avenue Tower A in Seoul, South Korea for $447 million, according to a Cushman & Wakefield statement.

SOFAZ won the auction for the property just this month, which was organized by Korea-based investment management firm Mirae Asset Management. The sellers included NongHyup Bank, NongHyup Life insurance, Woori Bank and KDB Life Insurance, all domestic Korean institutions. Global property services firm Cushman & Wakefield advised SOFAZ on the acquisition.

Pine Avenue represents SOFAZ’s first real estate acquisition in the Asia-Pacific region. In its statement, SOFAZ named Korea “one of the most attractive investment destinations in Asia providing steady gains across the office sector for many years,” as well as being “underpinned by a strong domestic economy and a well-capitalized financial sector.”

Previously, the $34 billion sovereign wealth fund made three property acquisitions in the European cities of London, Moscow and Paris. Including the Seoul investment, the state fund has committed $1.05 billion to property the since it was permitted to invest in the asset class in 2012, and has a maximum 5 percent allocation to real estate.

Pine Avenue Tower A was built in 2011 and is one of the few trophy assets recently completed and available for sale in Seoul central business district area. With a gross floor area of approximately 700,000 square feet, the asset is solely and fully leased to SK E&C, a subsidiary of one of the largest conglomerates of South Korea, SK Group.

“We have sought investment opportunities in key gateway Asian capitals for over a year and today I am delighted to announce that we have finally made our first acquisition in Seoul,” said SOFAZ executive director Shahmar Movsumov. “This large transaction shows our belief in the continued strength of major Asian real estate markets which have shown stable returns historically. We will continue to look for similar investment opportunities in Asia Pacific region.”