March 8, MBC current affairs program “Straight” aired an episode titled “Individual agencies, are you silly if you don’t have one?” The show investigated how many celebrities set up individual agencies and use them to buy real estate such as buildings and land before selling them to increase their assets.
During the program, the production team visited a building located in Yeoksam-dong, Gangnam District, Seoul. The building, which consists of two underground floors and seven above-ground floors, was reportedly sold for around KRW 15 billion (around US$11 million) in 2022. The transaction had already been publicly reported at the time.
The seller was a company called Deep Breathing, which was reportedly a family business linked to Ryu Jun Yeol. The actor served as the company’s internal director, while his mother held the position of CEO.
According to the broadcast, Deep Breathing purchased the property in 2020 for approximately KRW 5.8 billion. After demolishing the existing structure and redeveloping the building, the company sold it about two years later, reportedly realizing a significant capital gain.
The program also highlighted the high loan rate involved in the purchase. It was estimated that Deep Breathing obtained loans of around KRW 4.8 billion, around 80% of the purchase price, from financial institutions. Taking this into account, some analysts have suggested that the actual cash investment may have only been around KRW 1 billion.
The show also highlighted that companies often find it easier to obtain large loans to purchase commercial real estate than individuals.
A former bank branch manager explained during an interview: “Individual entrepreneurs are subjected to assessments, but businesses do not necessarily go through the same process. Interest on loans can also be recognized as business expenses. Most of these cases receive loans covering up to 80%.”
At the time, Ryu Jun Yeol’s side addressed the issue through his agency, explaining it the personal company was established to manage the actor’s income. They added it He had originally planned to develop the building with friends for a clothing business, but the project was postponed due to the COVID-19 pandemic, leading to the property’s eventual sale.
The broadcast described this strategy as a way to create wealth through leveraged investing, sometimes referred to as “investment in debt”. The program also cited other celebrity examples, including actors Hwang Jung Eum and Lee Byung Hun.
Hwang Jung Eum reportedly took out loans worth around KRW 3.5 billion through his family company to purchase a building in Sinsa-dong, Gangnam District. He resold the property three years and seven months later, earning around KRW 5 billion in capital gains.
Meanwhile, Lee Byung Hun purchased a building in Yangpyeong-dong, Seoul in 2018 through a company for KRW 26 billion, securing loans worth around KRW 17 billion. He later sold the property after about three years, making a profit of more than KRW 10 billion.
The reports also stated that in 2022, Lee Byung Hun purchased another building in Oksu-dong, Seongdong District, Seoul for KRW 24 billion, taking out loans of around KRW 19 billion for the acquisition.
Sources: Nate
