A jump in tensions with North Korea has fed a tenfold surge in overseas commercial property spending by investors south of one of the world's most heavily armed borders, making South Korea the largest property investor so far in 2013.
South Korean investors bought about $5 billion in the first five months, a huge increase on the first half of 2012, real estate consultant Jones Lang LaSalle said.
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"This allocation to commercial property over such a short period of time is unprecedented for the South Koreans," JLL said. "Tensions with the North Koreans have certainly aided the capital flight."
Its global buying spree, which puts it ahead of Canada and Singapore, is due to reach $10 billion this year, JLL said.
Tensions on the peninsula reached their peak in February when North Korea threatened nuclear and missile strikes against South Korea and the United States after U.N.-imposed sanctions for a nuclear weapons test.
Though the fiery rhetoric has eased in recent months, tensions are still running high as North Korea resists international pressure to abandon its nuclear weapons and missile testing program.
Asian investors have parked billions of dollars in the relative safety of commercial property in cities such as London, New York and Paris since the financial crash, often unable to spend such large sums in their smaller home markets.
Investment opportunities closer to home have been sparse. The South Korean stock market <.KS11> has fallen ten percent this year amid sluggish economic data in China and the United States and more recent fears the Federal Reserve will curtail its economic stimulus measures.
Aside from political tensions, a weakening South Korean won as the result of Japan devaluing the yen to kickstart economic growth has prompted South Korean investors to hold assets in foreign currencies abroad, JLL said.
The South Korean won fell as much as 1.2 percent on Friday to 1,159.4 per dollar, the weakest in almost a year.
One of South Korea's first major overseas property deals was HSBC's headquarters in London in 2009, a skyscraper the country's National Pension Service bought for $1.2 billion.
South Korean deals in 2013 include Mirae Asset Management's purchase of the 225 West Wacker Drive office tower in Chicago for $218 million and Samsung SRA Asset Management's $215 million deal to buy 30 Crown Place in London, home to law firm Pinsent Masons.
(Editing by Keiron Henderson)