Weave Living and KKR Establish Urban Living Strategic Partnership in South Korea

Rhea-AI Summary

WEAVE LIVING and KKR establish a strategic partnership to invest in rental housing assets in South Korea, targeting to build a portfolio of 1,200 units primarily in Seoul. KKR will hold a majority stake in the partnership, marking its first investment program in the South Korean rental housing sector.

Insights

Real Estate Investment Analyst

The partnership between Weave Living and KKR to invest in Seoul's rental housing market is a strategic move that taps into the growing demand for quality urban living spaces. Seoul is a densely populated city where the real estate market is competitive and the demand for rental housing is on the rise due to socio-economic shifts such as increased urbanization, a growing number of single-person households and rising property prices that outpace the average individual's purchasing power.

The decision to focus on approximately 1,200 units is a targeted approach that allows for a controlled scale-up, mitigating the risks associated with oversupply. Moreover, the diversification of Weave's consumer brands caters to different market segments, which could enhance tenant retention rates and reduce vacancy cycles. The long-term vision to institutionalize the rental housing market could introduce more structured investment opportunities, potentially leading to increased foreign investment and a more stable rental market. However, the success of this venture will hinge on the partners' ability to execute their strategy amidst regulatory challenges and market competition.

Market Analyst

KKR's entry into South Korea's rental housing sector signifies a broader trend of investment firms diversifying their portfolios by including real estate assets that offer steady cash flows and potential for capital appreciation. This move is aligned with global investment patterns where rental housing is becoming an attractive asset class due to its resilience during economic downturns and lower correlation with volatile stock markets.

For investors, this strategic partnership represents a commitment to the Asia Pacific region, which could signal confidence in the region's growth prospects. The collaboration between a global firm like KKR and a specialized operator like Weave Living could create synergies that enhance the value of the assets. This could result in improved financial performance for the involved entities and could positively influence their stock valuations. However, investors must monitor the execution of the strategy and market conditions, as shifts in consumer preferences or economic downturns could impact the anticipated returns.

Urban Development Expert

The strategic partnership's focus on Seoul's urban rental market recognizes the city's ongoing transformation and the need for modern, well-managed living spaces. The introduction of Weave's global management standards is likely to raise the bar for rental housing quality, which could have a ripple effect on urban development and living standards. By providing a variety of housing options, the venture is poised to address the diverse needs of the city's population, including young professionals and expatriates.

However, urban development is complex and involves considerations like city planning regulations, infrastructure support and community integration. The success of this venture will depend on its ability to align with Seoul's urban development goals and to contribute positively to the city's landscape. The venture's commitment to scale over time suggests a cautious approach to growth, which is prudent in the dynamic and often unpredictable urban development sector.

The venture will target to build an initial portfolio of c.1,200 units primarily in Seoul

SEOUL, South Korea--(BUSINESS WIRE)-- WEAVE LIVING (“Weave”), Asia Pacific’s preeminent living sector specialist, and KKR, a leading global investment firm, today announced the establishment of a strategic partnership to invest in rental housing assets in South Korea, with a focus on Seoul. The strategic partnership will target to build a rental housing asset portfolio of c.1,200 units with the initial tranche of capital and the strategic partners intend to scale this program over time as opportunities emerge.

Cityscape at Night in Seoul, South Korea (Photo courtesy of Freepik)

This transaction marks KKR’s first investment program in the rental housing sector in South Korea. KKR will hold a majority stake in the strategic partnership, while Weave will hold the remaining minority stake in addition to providing a range of management services to the venture as development manager and operating partner. The portfolio of assets will operate under the Weave Living brand umbrella, and Weave intends to offer its full repertoire of brand options which includes four consumer brands — WEAVE STUDIOS, WEAVE PLACE, WEAVE SUITES and WEAVE RESIDENCES — to renters in South Korea to cater to the diverse needs of prospective tenants.

David Cheong, Managing Director and Co-Head of Acquisitions on KKR’s Asia Real Estate team, said: "Korea has been a cornerstone of our Asia Pacific real estate strategy for a decade, and we are thrilled to make our foray into the urban rental market, which represents an emerging investment segment in Seoul. We are also pleased to establish this venture with Weave, with whom we have developed a trusted and aligned relationship. Together, we look forward to leveraging our respective skills to expand this strategic partnership to better serve our tenants over the long term.”

Sachin Doshi, Founder and Group CEO of WEAVE LIVING said: “Weave is excited to join forces with KKR to establish a foothold in the dynamic living sector in South Korea. KKR has an excellent track record as a real estate investor, and we are honoured that they have chosen Weave as their strategic partner for this asset class in the country. In recent years, renters have been struggling with various housing issues and we have identified a clear gap in the market for beautifully designed, well-located homes, managed to global standards that meet the needs of urban renters and young professionals in South Korea, primarily Seoul. We believe the opportunity is extremely large, and our goal is to facilitate the institutionalisation of the rental housing market in the country by introducing the Weave model to the market.”

The strategic partnership is the latest milestone for KKR’s real estate platform in Asia Pacific. To date, KKR has completed more than 20 transactions in the region across a range of segments including mixed use, commercial, industrial, hotel, office and retail properties. South Korea is an important part of KKR’s Asia Pacific real estate strategy, and today, KKR manages several assets in the country including, but not limited to, office towers located in Seoul’s central business district, and logistics centres located across the country.

This latest strategic partnership follows Weave Living’s recent announcements including upsized investment from its existing shareholders – Warburg Pincus and Founder Sachin Doshi, further expansion in Japan, where it recently (March 2024) opened three assets and acquired two new assets in prime locations in Tokyo, bringing the company’s Japan-based offerings to 11 locations. South Korea is Weave’s fourth market in Asia Pacific, following Hong Kong, Singapore, and Japan, establishing it as the preeminent living sector specialist in the region. Weave opened its Seoul office in June 2023 and currently has seven team members based there, with plans to double its headcount this year.

About Weave Living

Founded in 2017 by Sachin Doshi as a response to the gap in the market for beautifully designed and professionally managed living options, WEAVE LIVING currently owns and operates c. 2,500 rental accommodation units across the Asia-Pacific region under its four consumer brands — WEAVE STUDIOS, WEAVE PLACE, WEAVE SUITES and WEAVE RESIDENCES — catering to a broad and diverse demographic of urbanites and professionals in key gateway cities.

About KKR

KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR’s insurance subsidiaries offer retirement, life and reinsurance products under the management of Global Atlantic Financial Group. References to KKR’s investments may include the activities of its sponsored funds and insurance subsidiaries. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR’s website at www.kkr.com. For additional information about Global Atlantic Financial Group, please visit Global Atlantic Financial Group’s website at www.globalatlantic.com.

Weave Living

Website: https://www.weave-living.com/en/kr
Instagram: @liveatweave
Facebook: @liveatweave

View source version on businesswire.com: https://www.businesswire.com/news/home/20240325866051/en/

For Weave Living:

Joanna Park 

Tel: +82 2 2084 9230

E-mail: joanna@briman.co.kr



Kelly Bahn

Tel: +82 2 2084 9224

E-mail: kelly@briman.co.kr



Youha Jun

Tel: +82 2 2084 9228

E-mail: youha@briman.co.kr

For KKR:

Wei Jun Ong

Tel: +65 6922 5813

E-mail: weijun.ong@kkr.com

The Signature (for KKR Korea)

Jason Sohn

Tel: +82 10 9622 5915

E-mail: jason.sohn@thesignature.co.kr

Source: KKR

FAQ

What is the focus of the strategic partnership between WEAVE LIVING and KKR?

The focus of the strategic partnership is to invest in rental housing assets in South Korea, primarily in Seoul, with a target to build a portfolio of 1,200 units.

Who will hold a majority stake in the strategic partnership?

KKR will hold a majority stake in the strategic partnership with WEAVE LIVING.

What brands will WEAVE LIVING offer to renters in South Korea?

WEAVE LIVING intends to offer its four consumer brands - WEAVE STUDIOS, WEAVE PLACE, WEAVE SUITES, and WEAVE RESIDENCES - to cater to the diverse needs of prospective tenants in South Korea.

What is WEAVE LIVING's goal in South Korea?

WEAVE LIVING aims to introduce the Weave model to the South Korean market to institutionalize the rental housing market by offering beautifully designed, well-located homes managed to global standards.

How many transactions has KKR completed in Asia Pacific's real estate sector?

KKR has completed more than 20 transactions in Asia Pacific's real estate sector, including various segments like mixed-use, commercial, industrial, hotel, office, and retail properties.