With foreign tourist arrivals to Korea reaching a record 4.76 million in the first quarter of this year, lodging facilities in central Seoul are receiving prized treatment. As operating performance such as hotel room rates and occupancy rapidly improves, institutional and foreign investors are leading large deals. With individual investment in income-generating real estate joining in, the market is on a steady expansion trend.
According to the Ministry of Land, Infrastructure and Transport's real transaction price system Wednesday, transactions of general and sectional buildings whose primary use is lodging totaled 863.5 billion won from January to May this year, up 74% from 496.8 billion won in the same period a year earlier. Compared with 665.3 billion won traded in the same period of 2024, it also rose by about 30%. The number of transactions declined to 177 in 2024, 146 in 2025 and 126 in 2026, but analysts say the transaction value increased as the share of large deals grew.
Seoul's lodging industry went through a slump during COVID-19, with new supply halting and closures continuing. Afterward, as tourism demand revived with the shift to endemic conditions and the global popularity of the Korean Wave, including K-pop, drove a surge in foreign tourists, hotel profitability rose steeply. Institutional and foreign investors focused their interest on hotel assets, which offer not only operating income but also the potential for capital gains after raising their value, and large deals worth hundreds of billions of won were concluded one after another. Seoul's lodging transaction market grew to an annual scale of 2 trillion won in 2024 and 2025.
A similar flow has continued this year. Last month, Orion Asset Management partnered with Goldman Sachs to acquire the Seonyudo Union Hotel in Seoul's Yeongdeungpo district for 53 billion won. The hotel is expected to expand its size from 96 rooms to 151 rooms and introduce the Hilton brand to boost its asset value. In April, Hyundai Heim Asset Management, together with TPG Angelo Gordon, a foreign alternative investment management firm, purchased "Mangrove Dongdaemun" and "Mangrove Sinseol," known as co-living houses, for 39.1 billion won and 72.3 billion won, respectively.
Investment by wealthy individuals is also rising sharply. Amid a supply-demand imbalance in which the appeal of the lodging business is growing but new permits are not easily issued, there has been a growing move to remodel aging buildings and convert neighborhood living facilities into lodging establishments, rather than buy existing lodging facilities whose prices have risen.
However, experts advised approaching only after thoroughly examining profitability, as prices have risen as much as the investment fervor. An official at a brokerage in Jung-gu said, "We receive several inquiries a day asking whether commercial buildings can be converted to use as hostels," adding, "There are also many cases where a five-story motel that traded for 4 billion to 5 billion won is put back on the market less than a year later with its price raised to 7 billion to 9 billion won."
