Korean tourism real estate attracts foreign "big fish"

Large foreign investment companies are looking to acquire hotels in South Korea as more properties are put up for sale amid a strong recovery in the tourism market after the downturn caused by the Covid-19 pandemic.

Large foreign investment companies are looking to acquire hotels in South Korea as more and more properties are put up for sale. (Source: Booking.com)

Real estate companies, private equity funds, and sovereign wealth funds worldwide are interested in acquiring numerous hotels owned by domestic businesses such as KT, DL Group, and Lotte Group.

KT, a company expanding its investments in artificial intelligence (AI), recently selected a consortium including Samjong KPMG, Avison Young, Colliers Korea, and Realty Planet as sales advisors to sell its hotel properties.

The total value of hotels owned by KT is over 2 trillion won (US$1.37 billion), including 5-star hotels such as Andaz Hotel and Sofitel Ambassador, both in southern Seoul, Novotel Ambassador Seoul in Dongdaemun district, and Le Meridien & Moxy Myeongdong in central Seoul.

These hotels are built on sites that were formerly KT's telephone offices and are managed by its real estate subsidiary, KT Estate. This subsidiary currently accounts for over 10% of KT's total operating profit, with the share of hotel revenue increasing from 7.4% in 2019 to 34% at the end of Q3 2024.

Kim Dong Young, chairman of the Seoul Global Real Estate Association, said: "The data shows profitability from the hotel business, which is why global investment companies are showing interest."

In connection with DL Group, Singapore's sovereign wealth fund GIC, along with two US-based private equity firms — Kohlberg Kravis Roberts (KKR) and Blackstone — are eyeing the acquisition of hotels owned by the group.

The South Korean side wants to sell Glad Yeouido and Glad Gangnam Coex Center, both in Seoul, and Maison Glad Jeju, on the southernmost resort island of South Korea. Operated by Glad Hotel & Resort, a subsidiary of DL Group, the three hotels are estimated to be worth between 600 billion and 700 billion won combined.

Glad Yeouido and Gangnam COEX Center stand out with their prime locations in Seoul's Yeouido financial district and Gangnam business district. Meanwhile, Maison Glad Jeju, situated near Jeju International Airport, has solidified its presence following renovations in the mid-2010s.

Lotte Group has also joined the race to sell hotels amid rumors of a potential liquidity crisis. While the group denies the rumors, it has sought to sell unprofitable businesses.

The group is considering selling its 3-star and 4-star hotel brands, including L7 and City Hotel, with properties such as L7 Myeongdong, L7 Hongdae, and Lotte City Hotel Ulsan.

Industry officials explain that investment companies are likely to focus more on hotels than office buildings due to the oversupply of commercial office space.

For example, Bental Green Oak, often abbreviated as BGO, is perhaps the only notable foreign investor to have recently bid to acquire the Seoul Financial Center (SFC). Located in the bustling Gwanghwamun business district, the SFC is estimated to be worth over 1 trillion won.

Although Blackstone and Keppel considered acquiring the property, they ultimately withdrew from the bidding at the last minute. Conversely, data from commercial real estate services firm Genstar Mate shows that the average occupancy rate of hotels in Seoul reached 85.5% as of October 2024, the highest level in six years.

Meanwhile, industry officials note that hotels in provincial areas may not be as profitable as those in Seoul and other major cities due to the country's rapidly aging population.

Source: https://baoquocte.vn/bat-dong-san-du-lich-xu-kim-chi-hut-ca-lon-nuoc-ngoai-302792.html