Major foreign investment firms are looking to acquire hotels in South Korea as more properties come up for sale amid a strong recovery in the tourism market from the Covid-19 pandemic-induced slump.
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| Major foreign investment companies are looking to acquire hotels in South Korea as more properties come up for sale. (Source: Booking.com) |
Real estate companies, private equity funds and sovereign wealth funds around the world are interested in buying hotels owned by domestic companies such as KT, DL Group and Lotte Group.
KT, which is expanding its investment 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 ($1.37 billion), including five-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.
The hotels, built on the site of KT’s former telephone offices, are managed by KT Estate, a real estate subsidiary that now accounts for more than 10% of KT’s total operating profit, with the hotel revenue share expected to rise from 7.4% in 2019 to 34% by the end of the third quarter of 2024.
"Data shows that hotel business profits are high, which is why global investment companies are showing interest," said Kim Dong Young, president of the Seoul Global Real Estate Association.
Regarding DL Group, Singapore's sovereign wealth fund GIC, along with two US-based private equity firms — Kohlberg Kravis Roberts (KKR) and Blackstone — are eyeing a purchase of hotels owned by the group.
The South Korean side wants to sell Glad Yeouido, Glad Gangnam Coex Center, all in Seoul, and Maison Glad Jeju, on South Korea's southernmost resort island. Operated by Glad Hotel & Resort, a subsidiary of DL Group, the three hotels are estimated to be worth between 600 billion won 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, while Maison Glad Jeju, located near Jeju International Airport, has solidified its presence after a renovation in the mid-2010s.
Lotte Group has also joined the race to sell hotels amid rumors of a liquidity crunch. While the group has denied the rumors, it has sought to sell unprofitable businesses.
The group is considering selling its three-star and four-star hotel brands, including L7 and City Hotel, with properties such as L7 Myeongdong, L7 Hongdae and Lotte City Hotel Ulsan.
Industry officials explained that investment firms are likely to focus more on hotels than office buildings due to the oversupply of commercial office space.
For example, Bental Green Oak, commonly referred to as BGO, is perhaps the only notable foreign investor to bid for the Seoul Finance Center (SFC) recently. Located in the bustling Gwanghwamun business district, SFC is estimated to be worth more than 1 trillion won.
Although Blackstone and Keppel considered buying the property, they ultimately withdrew from the bidding at the last minute. In contrast, 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
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