[Exclusive] Nine Tree Hotel Myeongdong Branch 1 Listed for Sale at 70 Billion Won Range

Capstone Asset Management Purchased for About 66 Billion KRW in 2018
Occupancy Rate of Hotel Rooms Around Myeongdong Exceeds 90% Due to Increase in Foreign Tourists

Nine Tree Hotel Myeongdong. Photo by Yongjun Cho jun21@

The Nine Tree Hotel Myeongdong Branch 1 has been put up for sale. The sale price is up to 75 billion KRW.

According to the investment banking (IB) industry on the 4th, Capstone Asset Management is in the process of selling the Nine Tree Hotel Myeongdong Branch 1 located in Myeongdong, Jung-gu, Seoul (51 Myeongdong 10-gil). The Nine Tree Hotel Myeongdong Branch 1 is a 3-star hotel with a total of 144 rooms, spanning from basement level 1 to the 16th floor. It opened on December 1, 2012.

In 2018, Capstone Management purchased this hotel for about 66 billion KRW from the "Sangbo No.1 Entrusted Management Real Estate Investment Company (REIT)" created by Sangbo Real Estate Trust. Previously, Sangbo Real Estate Trust bought the Nine Tree Building for 48 billion KRW through the REIT in 2012.

The Nine Tree Hotel Myeongdong Branch 1 is well located, just a 1-minute walk from Myeongdong Station, and has secured stable profitability through a long-term lease contract with Parnas Hotel, a subsidiary of GS Retail.

Many hotels in downtown Seoul closed during the COVID-19 pandemic. However, as the pandemic subsided and travelers flocked back, the hotel market has not only recovered but reached a point where supply is insufficient. Recently, with COVID-19 becoming endemic and foreign tourists returning to Seoul, the supply of hotels in the Seoul area has significantly decreased, causing an imbalance in room supply and demand.

Meanwhile, with the increase in foreign tourists this year, hotels around Myeongdong have recorded room occupancy rates of over 90%. The average room occupancy rate of major hotels is between 80% and 90%, and the proportion of foreign guests has increased to about 9 out of 10 guests.

The Nine Tree Hotel Myeongdong and Nine Tree Premier Hotel Myeongdong II, operated by Parnas Hotel, recorded an average room occupancy rate of over 90% in April this year. From January to April this year, the average proportion of foreign guests at the two hotels was 80%, more than six times higher than the same period last year.

The average room occupancy rates of L7 Myeongdong and Lotte City Hotel Myeongdong also exceeded 90% in April. The proportion of foreign guests at L7 Myeongdong and Lotte City Hotel Myeongdong is about 95% and 90%, respectively. Four Points by Sheraton Myeongdong, operated by Chosun Hotel & Resort, recorded both an average room occupancy rate and foreign guest ratio of 90% in April. Le Meridien & Moxy Seoul Myeongdong, which opened in Myeongdong in November last year, recorded an average room occupancy rate of 80% in April. The proportion of foreign guests was about 85%.