Seoul’s Aging Small Buildings Transformed as Hoan Group Pursues Value-Up Through Accommodation for Foreign Visitors

[Financial News] A value-up project is being pursued to convert aging small buildings in central Seoul into accommodation facilities for foreign visitors. Rather than simply raising rents through remodeling, the approach seeks to change the revenue structure of aging buildings by incorporating accommodation operating income.
Hoan Group said on the 14th that it had signed a memorandum of understanding with Building Jinyoungssaem, a real estate development and investment brand, to develop aging buildings in major areas of Seoul into foreigner-friendly hostels.
The two companies are reviewing aging small buildings and unused spaces in key commercial districts across Seoul, including Gangnam District. The core strategy is to convert existing buildings into accommodation facilities by leveraging their locations and structures, thereby reducing development costs and improving operating profitability.
While previous value-up efforts for aging buildings focused on raising rents after remodeling or generating profits from sales, this project is distinguished by its combination of accommodation operating revenue. The plan also aims to reduce vacancy risks by utilizing central locations favored by foreign tourists.
Building Jinyoungssaem will identify potential properties, analyze their locations and business feasibility, and establish development plans. Hoan Group will handle accommodation planning and design, construction management, and contract operations after opening, linking development and operations within a single structure.
Hoan Group plans to implement a “profit-based contract operation system” that manages properties based on actual operating profit rather than sales. The strategy is to offer building owners who have relied on simple rental income an alternative that connects accommodation operating performance with asset returns.
Hoan Group is a company specializing in the development and operation of accommodation facilities, led by CEO Lee Seung-hoon, who previously served as CEO of Yanolja F&G. The company has experience ranging from developing small and mid-sized hotel brands to investment, development, and direct and contract operations.
A Hoan Group official explained, “There are many small buildings in central Seoul with excellent locations that are not being fully utilized because of aging and vacancies. We will improve the utilization of aging assets by considering not only development but also actual operating revenue.”
A real estate industry official added, “With construction costs rising, there are limits to improving the profitability of aging small buildings through simple remodeling alone. If the location has sufficient demand for accommodation from foreign visitors, converting the property into an accommodation facility could be an alternative for enhancing the value of aging urban assets.”


[email protected] Kim Kyung-ah Reporter