A private equity fund operated by a local real estate asset management firm has purchased an entire apartment building consisting of 46 units in Gangnam -- one of Seoul’s most expensive districts -- raising eyebrows in the realty sector that is facing tougher regulations.

IGIS Asset Management bought Samseong World Tower, an 11-story building from an individual for nearly 42 billion won ($34.90 million). It is rare for a local asset management company to buy apartment complexes as an investment with a PEF. So far, local firms have sought profits by leasing buildings, offices and logistics centers.

The deal was closed last month.

IGIS Asset is planning to renovate the apartments to increase their resale value.

The deal, however, raised some concerns that it might trigger a further housing price increase in Gangnam.

Some experts say that the deal by the nation’s largest real estate asset management company may be a signal to the market that apartment prices in this specific district still have more potential to grow.

Others say the firm is trying to evade taxes or to sidestep the government’s stricter real estate rules by using the privately pooled funds as an investment platform.

Under the government’s renewed drive to curb rising housing prices, owners of multiple homes are subject to massive taxes both on ownership and transactions and face stricter rules. Funds of business entities are not subject to the same rules.

The company, however, rebutted criticism saying the deal is purely an investment.

“There’s no such law restricting a privately pooled fund from purchasing an apartment. As a financial company, however, expecting to raise high profit-taking by making an investment in a certain area like Gangnam could be a different story. It is more like an ethical question,” said an industry official, who wished to remain anonymous.

“We reviewed the business potential from earlier this year and our goal was also set to close the deal by the end of April. But it was unfortunately delayed due to the COVID-19,” an IGIS Asset official said. “We haven’t set up the fund to avoid the government’s new real estate regulations.”

By Jie Ye-eun (yeeun@heraldcorp.com)