The Britain’s decision to leave the European Union has made Korean institutional investors reevaluate their real estate investment strategy in the United Kingdom amid rising uncertainties.

According to sources from the investment banking industry and National Pension Service on Thursday, Hyundai Investment Co. along with three or four other Korean institutional investors had sought to acquire Prince Exchange building located in Scotland’s capital city Edinburgh for about 130 billion won ($112 million), but recently decided to hold off investment until they further see the developments from the British break from the EU bloc. The six-story building on a site of 15,000 square meters was completed in 2000 and has been rented out to Royal Bank of Scotland (RBS) under a long-term lease. The investment was initially expected to generate an annual return of 7 percent.

An unnamed senior official at a foreign security company said that investors who have been eyeing on real estate for alternative investment amid low interest rate environment started to amend their investment strategies due to uncertainties after the June 23 Britain’s referendum. “Due to the high liquidity risk on real estate investment, some investors are reassessing their real estate investment not only in Britain but also in the United States,” he added.

Domestic institutional investors including the National Pension Service that have recently increased real estate investment in their portfolio after reducing stock or bond investment will likely readjust their portfolio and may shift back to stock and bond markets with ample liquidity, according to market watchers.

Many Korean investors have invested in buildings in the U.K. Hanwha Life Insurance Co. bought Ropemaker Place building, Korea Federation of Community Credit Cooperatives (KFCC) invested in Waterside building and Hyundai Securities Co. purchased Marks & Spencer headquarter building.

By Kang Doo-soon, Yong Hwan-jin and Chae Jong-won

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