How low interest rates in South Korea are fueling foreign investment

(Hyatt Regency Waikiki Beach Resort)

Low interest rates in South Korea are driving investors there to seek out international opportunities for better returns—often in hotels. 

Some firms are paying record prices for assets in major tourism destinations like Hawaii and San Francisco. For example, Mirae Asset Global Investments is planning to purchase the leasehold on the Hyatt Regency Waikiki Beach Resort and Spa on Oahu for an estimated $780 million. The sale would be the biggest single-property hotel transaction ever in Hawaii, according to research firm Real Capital Analytics. It would mark Mirae’s second large hotel acquisition in Hawaii in the past 12 months. The company also purchased the Fairmont San Francisco in November.

South Korea’s family-run businesses have also recently made some major buys in recent years, like when the Lotte Group acquired the New York Palace hotel for $850 million. Korean Air Lines, meanwhile, is building a hotel and office complex in Los Angeles at a cost of $1.1 billion.

Even institutional investors are getting in on the action. South Korea’s Teachers Pension underwrote $77 million in mezzanine debt to fund investors’ purchase of the Westin St Francis hotel in San Francisco. 

Source: South China Morning Post