'Record Low Yen' Korean Capital Turning Eyes to Japanese Golf Courses

[Asia Economy Reporter Park Soyeon] Amid an unprecedented depreciation of the yen (yen value decline), domestic institutions such as pension funds and mutual aid associations are turning their attention to investing in Japanese golf courses.

According to the investment banking (IB) industry on the 27th, major institutional investors including the Police Mutual Aid Association are considering participating as financial investors (FI) in mergers and acquisitions (M&A) of Japanese golf courses. The reason institutional investors are focusing on Japanese golf courses is that the yen depreciation effect has made it possible to acquire well-located Japanese golf courses at prices about 10-20% lower than before.

Unlike the high acquisition prices of Korean golf courses, which approach 10 billion KRW per hole, the significantly lower price is also considered an advantage. Recently, MBK Partners sold Accordia Golf Group, which owns and operates more than 170 golf courses across Japan, for about 4.3 trillion KRW. Simply calculated, this means each golf course was sold for about 25 billion KRW.

An IB industry official said, "According to market research, the price of Japanese golf courses is about 10 billion KRW for 18 holes, which is incomparably lower than in Korea," adding, "Institutions with tens of thousands to hundreds of thousands of members are actively considering this not only as an investment but also from the perspective of member welfare."

Japanese golf courses are gaining more attention as an alternative to absorb the increased number of Korean golfers during the COVID-19 pandemic. Due to the perception that golf courses were relatively safe during the pandemic, golf course operations flourished not only in Korea but also in Japan. An investment institution official predicted, "It will be possible to enhance business feasibility through Japanese tourism businesses linked with golf."

The supply and demand situation of golf courses is also cited as a factor increasing the future value of Japanese golf courses. Although the number of golf courses is decreasing, the number of visitors is increasing. As of April, there are 2,140 golf courses operating in Japan. Compared to 2,356 golf courses operating in 2004, the number has decreased by 216 over the past 10 years. The number of golf course visitors is estimated to have increased from 82.347 million in 2020 to nearly 90 million in 2021. This is analyzed to be due to an increase in the number of rounds per person.

Meanwhile, the Japanese yen began to weaken against the dollar starting in March, when the Ukraine-Russia war intensified, and sharply declined in the second quarter as the U.S. Federal Reserve (Fed) adopted a full-scale interest rate hike policy. In particular, in June, when the U.S. implemented a 0.75 percentage point rate hike known as the 'giant step,' the yen-dollar exchange rate surpassed 135 yen, the highest level in 24 years. During this period, the KRW-JPY exchange rate also reached the 930-940 KRW per 100 yen range, marking a five-year low.

This content was produced with the assistance of AI translation services.