Hilton Seoul to be redeveloped as mixed-use complex

Millennium Hilton Seoul will likely join the ranks of five-star hotels in downtown Seoul that were sold for redevelopment into luxury residential or hotel spaces, amid expectations of a rebound in post-pandemic travel demand. 

Seoul-based IGIS Asset Management Co. has signed a memorandum of understanding to buy the hotel from Singapore-listed City Developments Limited (CDL) for around 1 trillion won ($845 million), according to investment banking sources on Oct. 18.

Both sides are expected to reach a definitive agreement next month at the earliest.

IGIS, the country's largest real estate investment firm, plans to redevelop the hotel property into a mixed-use complex comprising a landmark hotel and office and retail spaces as travel restrictions are being loosened with the rise of COVID-19 vaccination rates.

"Since last year, landmark hotels in Seoul have been sold due to poor business conditions and are being redeveloped into the office or residential spaces, resulting in a decrease in the luxury hotel supply," said an asset management industry source. "Now the atmosphere is it's time to invest in hotels to prepare for a rebound in post-pandemic travel demand." 

In 2018, IGIS acquired the five-star Renaissance Hotel in Yeoksam-dong, Gangnam District, from a domestic construction firm. It reopened as
an office building and a super-luxury hotel, Josun Palace Seoul Gangnam, in May of this year. 

RESUMED NEGOTIATIONS

CDL is part of Hong Leong Financial Group and runs over 100 hotels in 20 countries. It put Hilton Seoul on the market in March of this year, having suffered a record loss in 2020 due in large part to its soured investment in a Chinese property developer.

Its early-stage discussions with IGIS to sell Hilton Seoul had broken down in the face of opposition from the hotel employees concerned about their job losses. Recently, they resumed negotiations and agreed that the redevelopment would include a hotel space to increase their job security.

Millennium Hilton Seoul, sitting at the foot of Mt. Namsan for almost 40 years, was the venue of South Korea's 1997 negotiations to secure a $58 billion rescue package from the International Monetary Fund.

Since its opening in 1983, it had been co-managed by the now-defunct Daewoo Group and Hilton International, a US hotel chain, until Daewoo sold the property to CDL for $213.5 million in 1999. 

The 22-floor hotel has 700 guest rooms with a gross floor area of 82,856 square meters. It was built on the land measuring 18,760 square meters.

Back in 2008, Kangho AMC, a Korean real estate developer, had signed a preliminary agreement to buy Hilton Seoul for 580 billion won, but backed down after it failed to raise money from investors.

Write to A-Young Yoon at youngmoney@hankyung.com
Yeonhee Kim edited this article.