South Korean financial companies including banks, insurers and credit card companies are jumping into the rental housing market as part of efforts to seek new revenue sources in a record-low interest rate environment.

According to sources from the financial industry on Sunday, Hana Financial Group has started conducting feasibility study in cooperation with local authorities to build rental houses across 15 cities including Seoul, Suwon, Daejeon and Busan.

KEB Hana Bank expects that demand for its rental houses would be high as they will be built on its branch office lots that are located in bustling areas in city centers. Renting out buildings is expected to generate higher returns than selling the properties, said an official from Hana Financial Group.

Samsung Life Insurance Co. and Samsung Fire & Marine Insurance Co., Samsung Group’s insurance arms, have also tapped into rental housing market through New Stay projects, the Korean government-led initiative to encourage private companies to supply high-quality rental housings to individuals on a large scale. Samsung Life provided a loan of 250 billion won ($212 million) for the project in seven sites in Seoul. New Stay is the only business that can steadily generate an about 3 percent interest income annually for 10 years, said unnamed official at Samsung Life Insurance. Samsung Fire & Marine Insurance is also giving loans to New Stay project in Seoul metropolitan area including Wirye New City.

Credit card companies are also jumping into the monthly rent payment market, which is estimated at about 6 trillion won annually.

Hana Card was the first to offer rent payment application service. The credit card company has signed an agreement with real estate app Dabang to take advantage of the app’s more than five million users. Dabang is the country’s second-most popular apartment hunting app that connects landlords with tenants.

Shinhan Card and KB Kookmin Card are also joining hands with Korea Housing Rent Management Association to provide monthly housing fee payment services. A large number of credit card companies find the monthly rent payment market as stable profit sources with higher commission rates.

By Kim Tae-sung

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]