Invesco, SK D&D likely to buy co-living building in Seoul

A consortium between US asset management firm Invesco and the real estate investment arm of SK D&D Co. has been named the preferred buyer of Noudit Hongdae, a co-living building in Seoul, in a deal worth around $110 million.

IGIS Asset Management Co. announced on Monday that it has selected the Invesco-backed consortium as the preferred bidder for the property.

The largest real estate investment firm in South Korea acquired Noudit Hongdae for 132.0 billion won in 2021 and has now put it up for sale as its debts linked to the property come due this month.

The Invesco-D&D Investments group was understood to have offered 140 billion-150 billion won ($103 million-110 million) for the purchase, according to sources with knowledge of the matter.

D&D Investments is a unit of SK D&D Co., a real estate developer. Invesco is expected to provide the majority of the funding.

The mixed-use building offers short- and long-term accommodation, including co-living studios and hotel rooms for tourists. The site provides 296 private rooms, shared kitchens and various amenities like a fitness center, as well as retail and co-working spaces.

The property is under a master lease with Local Stitch, a domestic co-living operator, through 2033. SK D&D previously acquired Local Stitch through its real estate operations subsidiary, D&D Property Solutions. 

Located near the Hongik University street area, commonly known as Hongdae, the property spans three basement floors and seven above-ground floors with a total floor area of 17,000 square meters.

The bid has drawn five contenders, including a Blackstone-Travelodge consortium and a Kolon House Vision-Aion Investment Management consortium.

The Invesco-D&D group secured the highest score in terms of deal closing capabilities, according to the sources.

With $1.84 trillion in assets under management as of March, Invesco has invested in logistics centers and senior housing in Asia’s No. 4 economy. The Noudit Hongdae deal would mark its foray into the country’s co-living market.

South Korea’s rental housing market is becoming attractive to investors with the rise of one- to two-person households and tenants shifting to monthly rental payments from the traditional Jeonse system, where tenants pay large refundable deposits to landlords.

Last year, Morgan Stanley teamed up with Gravity Asset Management to acquire residential properties in Doksan-dong and Anam-dong in Seoul for core investments.

US real estate firm Hines also entered the sector in 2024, acquiring a new-build rental property in Seoul’s Sinchon neighborhood, jointly with Mastern Investment Management.

In January, the Canada Pension Plan Investment Board (CPPIB) formed a 500- billion-won joint venture with co-living startup MGRV to invest in South Korea’s rental housing market.

In March, they jointly acquired the headquarters of a domestic women’s clothing company for 35.5 billion won for renovation into a rental residence.

Write to Gyeong-Jin Min at min@hankyung.com

Yeonhee Kim edited this article.