K-REITs & Infrastructure Monthly — Vol.002 (2026-07)

Office led, Residential lagged

Office led July at +0.28% and Residential came last at -3.29%. The K-REIT & Infra index returned -0.26%, with Office, Retail and Industrial above it. Best to worst spanned 3.6pp, so sector choice separated returns by only a narrow margin. Over the same month the 3-year KTB rose 6bp and the 10-year 17bp.

The ranking shifted sharply from June. Diversified and Residential, first and second last month, fell to fourth and sixth; Retail and Industrial climbed from fifth and sixth to second and third. Office moved from third to first. Only Infrastructure held roughly still, slipping from fourth to fifth.

Office: 34pp between best and worst

The biggest faller was Aegis Residence at -3.29%. In Infrastructure the two names went opposite ways, Macquarie Korea Infrastructure at -2.46% and KB Balhae Infrastructure at +3.85%, and the sector followed the larger Macquarie. Shinhan Seobu T&D returned -0.65%.

Retail was the widest split among the smaller sectors. Lotte REIT gained 3.91% while E-REIT Cocreb fell 11.47% and Koramco Life Infrastructure 3.46%, leaving the sector at +0.07%. Industrial divided the same way, Mirae Asset Global at +7.83% against ESR Kendall Square at -0.75%.

Office's 13 constituents run from Masturn Premier at +23.53% to Daishin Value at -10.45%, a span of 34.0pp. Among the larger names SK REIT returned +0.74%, Hanwha REIT +2.54% and Samsung FN REIT -2.18%.

Korea-US policy rate gap narrows to 1.00pp

The two central banks moved in opposite directions in July. The Bank of Korea raised its base rate to 2.75% while the Fed held the upper bound of its target range at 3.75%, narrowing the inversion — the Korean rate sitting below the US one — from 1.25pp to 1.00pp. The inversion itself remains in place.

Bank of Korea raises 25bp on July 16

The Bank of Korea's Monetary Policy Board raised the base rate from 2.50% to 2.75% on July 16, a 25bp increase. The statement gave three reasons: growth is strengthening, led by exports and investment; inflation is expected to run above target for a considerable time; and risks on the financial stability side persist. On the domestic economy it noted that exports and investment continue to grow strongly, led by semiconductors, while consumption has held up, so growth has broadened.

Because the Board had held at its previous meeting on May 28, this was a change of direction. The May statement saw inflation pressure rising from the Middle East conflict while growth ran ahead of expectations on strong exports, but judged uncertainty around the conflict high enough to hold and watch. That reservation is gone from the July statement, replaced by a judgment that a 25bp increase was appropriate.

Korean treasury yields up across the curve

Korean treasury yields moved the same way. Over July the 3-year rose 13bp to 3.83% and the 10-year rose 22bp to 4.31%. With the long end moving more, the 10Y-3Y spread widened to +0.48pp.

US Federal Reserve holds on a 9-3 vote

The Fed went the other way in the same month. At its July 29 meeting the FOMC held its target range at 3.50-3.75%, where it has stood since the 25bp cut of December 11 last year. The statement judged economic activity to be expanding at a solid pace despite uncertainty tied to the Middle East conflict, with strong productivity growth and capital investment, while noting that inflation remains above the Committee's 2 percent goal, reflecting in part supply shocks in sectors including energy. US headline CPI rose 3.5% year on year, core CPI 2.6%, and PPI 5.5%.

The Committee was not unanimous. The vote split 9-3, with Hammack, Kashkari and Logan preferring a quarter-point increase at this meeting. In the statement text one sentence on reserves changed from "reaffirmed" to "is continuing", leaving the policy of maintaining ample reserves itself unchanged. Separately, the minutes of the June meeting were published on July 8; minutes appear three weeks after the decision, so July's are due in August.

As of the latest published month (2026-06).