Real estate is becoming part of the global economy. In major world markets, real estate has been transforming itself into an information industry based on international standards from one that had been private and local. This transformation has been driven by the desire of large financial institutions to invest in real estate as an asset class. Real estate is unquestionably evolving in the direction of providing asset managers with quantifiable data similar to what is available for other asset classes, such as stocks and bonds. A global industry requires information based on standards for comparability and consistency.
For many reasons, Korea has lagged behind in the adoption of international standards and development of an information based real estate industry. This paper makes an argument that Korea should modernize its real estate industry based on international standards. Not only would it allow Korea to compete for international real estate capital, but it would assist in the development of domestic capital markets and the country's asset management industry.
International real estate standards cover a broad range of disciplines, but this paper will focus on REIS and GIPS, real estate standards developed in the US and internationally for the asset management industry. Background will also be presented on the development of Modern Portfolio Theory and its impact on the global transformation of the real estate industry. Since Korea has its own unique financial infrastructure, it must develop a Korean way to modernize its real estate industry. The government has a role to play along with real estate practitioners and academia.