
Business officers mentioned on Friday that main international funding corporations are searching for to amass motels in Korea as an growing variety of properties turn into out there on the market amid the sturdy restoration of the journey market following the downturn attributable to COVID-19.
Actual property corporations, non-public fairness funds and sovereign wealth funds internationally are fascinated with shopping for a number of motels owned by home companies equivalent to KT, DL Group and Lotte Group, they mentioned.
The businesses wish to promote their respective motels, whose values have elevated as extra worldwide vacationers return to Korea after the COVID-19 pandemic. This rise in worth offers a chance for sellers to lift liquidity and spend money on new companies.
KT, which has been increasing investments in synthetic intelligence (AI), not too long ago chosen a consortium consisting of Samjong KPMG, Avison Younger, Colliers Korea and Realty Planet as its gross sales advisers to promote its resort properties.
The full worth of motels belonging to KT is over 2 trillion received ($1.37 billion), together with five-star motels equivalent to Andaz Lodge and Sofitel Ambassador, each in southern Seoul, Novotel Ambassador Seoul in Dongdaemun District, and the Le Meridien & Moxy Myeongdong in central Seoul.
The motels have been constructed on the websites of KT’s former phone places of work and are managed by its actual property subsidiary, KT Property.
The subsidiary now accounts for greater than 10 p.c of KT’s whole working revenue, with the share of resort income rising from 7.4 p.c in 2019 to 34 p.c by the tip of the third quarter of 2024.
“The information suggests profitability of resort enterprise, which provides a cause for world funding corporations to point out their curiosity,” Kim Dong-young, chairman of the World Actual Property Affiliation of Seoul, mentioned.
Concerning DL Group, Singapore’s sovereign wealth fund GIC, together with two U.S.-headquartered non-public fairness corporations — Kohlberg Kravis Roberts (KKR) and Blackstone — is eyeing the acquisition of the conglomerate-owned motels.
The Korean facet desires to promote Glad Yeouido, Glad Gangnam Coex Heart, each in Seoul, and Maison Glad Jeju, in Korea’s southernmost resort island.
Operated by DL Group’s subsidiary, Glad Lodge & Resort, the three motels are estimated to be value between 600 billion received and 700 billion received mixed.
Glad Yeouido and Gangnam COEX Heart stand out for his or her prime areas in Seoul’s monetary district of Yeouido and the business district of Gangnam. In the meantime, Maison Glad Jeju, situated close to Jeju Worldwide Airport, has been strengthening its presence following renovations within the mid-2010s.
Lotte Group has additionally entered the frenzy to promote motels amid rumors of a possible liquidity disaster.
Whereas the corporate denied the rumor, it has been searching for to safe money by unloading unprofitable companies. The Group is contemplating promoting its three- and four-star resort manufacturers, together with L7 and Metropolis Lodge, with properties equivalent to L7 Myeongdong, L7 Hongdae, and Lotte Metropolis Lodge Ulsan.
Business officers defined that funding corporations are more likely to focus extra on motels than workplace buildings as a result of oversupply of economic workplace area.
As an example, Bental Inexperienced Oak, generally identified by its acronym BGO, was doubtless the one notable international investor to take part in a latest gross sales bid for the Seoul Finance Heart (SFC).
Situated within the bustling enterprise district of Gwanghwamun, the SFC is estimated to be value over 1 trillion received.
Though Blackstone and Keppel had thought of buying the property, they finally withdrew from the bid on the final minute.
In distinction, knowledge from business actual property service firm Genstar Mate confirmed that the common room occupancy charge for motels in Seoul reached 85.5 p.c as of October 2024, the very best degree prior to now six years.
In the meantime, trade officers famous that motels in provincial areas is probably not as worthwhile as these in Seoul and different main cities, given the nation’s speedy inhabitants growing old.
They need to be “provided a package deal with those in massive cities” for the gross sales to achieve success, the officers mentioned.