An aerial view of the skyscrapers and the densely packed buildings are seen on Jan. 29, 2021, from an observation deck in Tokyo. AP-Yonhap

Investors of overseas real estate funds sold by the country's top five banks are expected to see over 100 billion won ($77 million) in losses in the first half of next year, due to a sustained slowdown in the global real estate market, according to market watchers, Monday.

The combined balance of the funds sold by KB Kookmin, Shinhan, Hana, Woori and NongHyup came to 753.1 billion won. Of the total, 106.1 billion won will reach maturity by June, followed by 151 billion won in the latter half.

This adds concerns to the recent mis-selling suspicions involving commercial lenders and brokerages over the irresponsible sales of equity-linked securities (ELS) tied to the performance of the Hang Seng China Enterprises Index (HSCEI). Investors' combined losses are expected to top 3 trillion won in the first half of next year.

The funds will not be able to yield a profit if real estate prices fall below a certain level. Also unfavorable is the recent global real estate market downturn, whereby demand for properties is not as strong. During the pandemic, office vacancies shot up after many began working from home.

The initial promised returns on the funds were between 6 percent and 7 percent. But investors are not likely to get even their principal back.

Market watchers say certain losses are inevitable since the products that cannot extend maturity or be rolled over for a refinancing will be sold for less than the sales price.

“Not as much value is associated with trading or renting commercial buildings in the recent property market nowadays, due in large part to soaring interest rates,” an industry official said.

An official of one of the banks said, “We are closely monitoring the situation. The funds spilling over to put our financial systems at risk are limited.”

According to the Financial Services Commission (FSC), local financial service providers made 55.8 trillion won in overseas real estate alternative investments.

FSC Vice Chairman Kim So-young convened a meeting last week to require local financial firms to strengthen monitoring of possible losses from overseas real estate funds.

“The overseas real estate investment exposure is about 0.8 percent of their total equity capital combined. The figure is no cause for alarm yet, but lenders and brokerages should be prepared for the worst-case scenario,” he said during the meeting on Dec. 11.