The’Burning Sun’ hotel is also for sale…

Hotels in downtown Seoul are pouring into the real estate market for sale. The first luxury hotel in Gangnam, the Sheraton Palace Hotel in Seocho-gu, the Le Meridien Hotel in Gangnam-gu, which became famous due to the’Burning Sun’ incident, and Double A in Jung-gu (formerly Myeong-dong Astoria Hotel) with a 60-year tradition were recently sold. Crown Hotel in Yongsan-gu, Tmark Hotel in Jung-gu There are countless hotels undergoing sale negotiations, such as Myeong-dong. Nine out of ten hotels in the Myeongdong area are for sale. Han Jin-soo, professor of hotel management at Kyung Hee University, said, “Among my students, I keep getting calls that I quit working as a hotel manager in Myeong-dong and Chungmuro.” The hotel industry expects that up to half of all Seoul hotels will be sold this year.

The reason for the unprecedented flood of hotel sales in history was that the hotel was hit by a direct hit by Corona 19 in a situation where the number of hotels surged under a special law of the government to encourage the establishment of hotels. The government saw that the number of Chinese tourists will continue to increase, and in order to accommodate them smoothly, the’Special Act for Expansion of Tourist Accommodation Facilities’, which eased various regulations in 2012, was temporarily enforced (until 2016). Floor area ratio standards (150% for general residential areas and 500% for commercial areas based on Seoul) were relaxed, and standards for securing parking spaces (134㎡ → 1 vehicle per 300㎡) were also solved. Accordingly, the number of hotels in downtown Seoul increased from 161 in 2012 to 460 in 2019, 186%. Increased. Kim Mo (56), who runs a tourist hotel in Myeong-dong, said, “Until last year, I had somehow endured by reducing labor costs by closing in anticipation that the corona would soon calm down, but now I have no choice but to give up.”

Real estate developers, asset management companies, investment banks, construction companies, and foreign investment companies are the ones who pay attention to Seoul hotels for sale. Among the real estate professional asset management companies, some companies roll 30 trillion won in funds. General Equity Partners Chairman Kwon Ji-hoon said, “The main focus is not on hotel buildings, but on land,” he said. “In the situation where there is very little land to build something new in downtown Seoul, hotel sites with excellent locations are inevitably attractive.”

Projects to demolish hotels and build luxury residential facilities on the spot are the most common. The Le Méridien Hotel (a site of 10,362m2), bought by the Hyundai E&C consortium for 700 billion won, is expected to be transformed into a high-end residential officetel, such as Lotte Tower Signiel in Jamsil or Pienpolus in Cheongdam-dong. For Signiel, an officetel with a dedicated area of ​​244m2 was sold for 11.5 billion won. The Sheraton Palace (9968㎡), which the real estate developer The Land purchased for 350 billion won, is also planning to demolish the hotel and develop it into a luxury residential complex. The Crown Hotel (7011㎡), which was designated by the Hyundai E&C consortium as the preferred bidder, and the Gyeongnam Hotel (3633㎡) in Dongdaemun-gu, are also planned to be built by Hyundai E&C as officetels.

There are also increasing attempts to change existing hotel facilities into shared housing. Shared housing is a residential version of a shared office such as WeWork, and is a new concept of housing that tenants share by creating convenient facilities such as a hotel lounge, fitness center, and reading room on the first and second floors of the building. Yongsan Dragon City Hotel, the largest in Asia, plans to convert 500 of the 1,700 guest rooms into shared residential areas. Sang-yeop Ryu, CEO of Kind, a real estate consulting company, explained, “A new trend is that asset management companies buy hotels and convert them into shared housing, and companies specialized in shared housing management operate facilities in shared housing.” The pre-generation plan announced by the government at the end of last year also included plans to convert hotels into public rental housing.

However, these changes are not without obstacles. First of all, some point out whether it is possible to maintain the existing benefits if a hotel that has already received floor area ratio benefits under the government’s special law to promote hotel construction is converted to another use. Businesses who have recently purchased a hotel have yet to go through the licensing process. In addition, as hotels are essential facilities in cities, there are concerns that the problem of hotel shortages may emerge again after the coronavirus.

Reporters Ham Jong-sun and Kim Won [email protected]