M&G Real Estate has bought three assets in South Korea for $230m (€205m), its first deal in the country’s retail sector.

The real estate fund management arm of M&G said the deal was carried out for its $2bn core Asia real estate strategy, managed by Singapore-based Erle Spratt.

The three properties were sold at an average 6.5% yield.

Two hypermarkets in Daejeon and Jeju were bought along with an outlet mall in Incheon City. All three are leased to South Korea’s largest retailer, Lotte Shopping.

M&G invested in the country’s office sector in 2004.

Spratt said South Korea is a key market with strong capital flows from global pension funds and insurance companies in the UK and Europe.

Stefan Cornelissen, M&G’s head of institutional business, Benelux, Nordics and Switzerland, said the Asia Pacific real estate market rivals the US and Europe in terms of maturity, transparency and liquidity.

He said Dutch pension fund asset manager Blue Sky recently committed capital to M&G from its Core Asia Pacific Fund.

“European investors in search of diversification can now benefit from Asia’s strong economic growth and attractive long term returns without going higher up the risk curve,” Cornelissen said.

“We expect further capital to follow from other UK and European investors. Asian real estate has come of age and is earning itself a strategic place in a diversified core real estate portfolio.”