Blackstone zooms in on hotels, warehouses in Korea

The global real estate market is poised for a recovery, led by industrial warehouses, residential facilities and data centers benefiting from declining interest rates and supply shortages, said Kathleen McCarthy, global co-head of Blackstone Real Estate.

In South Korea, the global investment firm is optimistic about hotels and logistics facilities, which remain undersupplied amid rising travel demand and the rapid growth of online shopping.

“Last year was an inflection point where we saw a bottoming after two difficult years that have followed rate hikes,” she told The Korea Economic Daily in a recent interview.

"We see a real bottoming in real estate values and that the recovery is underway, so we want to be investing as much as we can while markets remain dislocated."

She is betting on industrial warehouses, rental housing and data centers amid the AI boom. In the past few years, rising borrowing costs and inflation led to a drop in new housing starts.

Alongside the rapid penetration in e-commerce, the trend of strengthening supply chains will be another boost to the logistics sector, she said.

“On a global scale, rental housing is very attractive to us,” McCarthy noted. “We also see opportunities in hospitality, including here in South Korea.”

POLITICAL RISKS IN KOREA

McCarthy said Blackstone is undeterred by the political risks in South Korea caused by President Yoon Suk Yeol’s impeachment. Yoon has been detained for an investigation into his short-lived martial law declaration.

“Here in Korea we think that the deepest opportunities for us this year are likely to continue to be logistics and hospitality,” she explained, adding that her company is targeting last-mile logistics facilities.

Last year, Blackstone bought the Gangnam office tower of K-pop pioneer SM Group for 120 billion won ($85 million) to renovate into a hotel and Kimpo Logistics Center. The purchase followed the sale of Arc Place, a prime office building in Seoul, for 791.7 billion won.

“Similarly in hospitality, we see very limited new supply in this market, but demand that really exceeds, far exceeds pre-COVID levels.”

McCarthy began her career at Goldman Sachs in the M&A group after receiving a bachelor’s degree from Yale University.

Write to Byung-Hwa Ryu at hwahwa@hankyung.com

Yeonhee Kim edited this article.