A South Korean investment group has acquired a large Ke'eaumoku Street property for $49 million, in what could signal a renewed interest in the Kapi'olani corridor by foreign investors.

Cuzco Development U.S.A. LLC yesterday completed its purchase of the 3.5-acre property, which includes the Sorobol Korean Restaurant and several low-rise buildings that house a strip club, restaurants, bars and small retailers.

The buyers will likely tear down the aging buildings to make way for a mixed-use commercial complex that could include retail and office space and condominiums, people familiar with the deal said.

The $318-per-square-foot price represents a premium from existing land values, but it is well off the peak $500-per-square-foot prices during the Japanese investment boom of the late 1980s and early 1990s.

The property, near Ala Moana Center and bordered by Ke'eaumoku, Rycroft and Liona streets, is the latest to be purchased by South Korean investors.

SamKoo Development, a Seoul-based manufacturer, acquired the former Cutter car dealership site on Kapi'olani Boulevard in June for $26 million, where it plans to build high-end condos.

The company also bought two smaller lots on the 1600 block of Kapi'olani Boulevard a week later for about $15 million.

In September, Posec Hawaii Inc., the local development arm of a South Korean steel company, completed its long-awaited 36-story condominium tower at the corner of Kapi'olani and Ward Avenue.

"I think you'll see more Korean investors coming into the real estate market over the next few years," said Steve Sofos, president of Sofos Realty Corp.

Much of the interest from South Korea is fueled by a new federal law that is designed to make it easier to travel to Hawai'i from South Korea.

About 37,000 of the roughly 7 million visitors who come to Hawai'i each year are from South Korea.

While the number is still down from the 130,000-a-year level prior to the Asia economic crisis of the late 1990s, the Korean visitor count is expected to grow significantly over the next two years.

That's when the federal government will lift visa requirements for visitors who want to travel to Hawai'i, said Pearl Imada Iboshi, state economist with the Department of Business, Economic Development and Tourism.

Cuzco, whose partners include South Korean construction executive Gun Il Kim and his partner, Doo Sup Byun, could not be reached for comment about plans and potential tenants.

The sellers, a kama'aina family that includes retired attorney John Plews, declined comment through their lawyer Sandy Marrack.

Cuzco was represented by Rachael Chung, an agent with Concepts Unlimited GMAC Real Estate.

Chung also represented SamKoo in its Kapi'olani Boulevard purchases earlier this year.

Under existing zoning, the buyers could build a structure as high as the 150-foot height limit, allowing them to develop a large range of retail, office or residential uses.

The lease for current tenants expires in June 2009.

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.

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