When it comes to duty-free business in Seoul, the winner doesn’t seem to take it all.

Shares of Hotel Shilla, which clinched a high-profile bid to operate duty-free stores in downtown Seoul in July, have fallen sharply ever since on concerns over market overheating.

Hotel Shilla’s common stock price took a nosedive to a 52-week low of 79,000 won ($66.90) on Friday, down 44.7 percent from when they hit their highest on July 13 at 143,000 won after the company won the business license for running a duty-free store in Seoul.

Analysts attributed the stock plunge to the intensifying competition among duty-free store operators in Seoul as other conglomerates such as Doosan and Shinsegae were awarded new licenses for duty-free outlets in November.

Hanwha Galleria Timeworld, which secured the license along with Hotel Shilla in July, was also hammered by a large decline in stock price. The shares closed at 94,800 won on Friday, down 58 percent from 220,500 won on July 17.

This year, the government expanded the number of duty-free shops in Seoul to nine from six to vitalize the local economy mired in a slump by attracting more tourists, mainly Chinese consumers.

“Hotel Shilla has received much market expectation as the only listed duty-free store operator. But its premium could be diluted as other listed companies are jumping into the business,” an analyst at Heungkuk Securities said.

The nation’s second-largest duty-free seller after Lotte founded joint venture HDC Shilla Duty Free with Hyundai Development to develop what it calls the world‘s biggest downtown duty-free complex in Yongsan, central Seoul. It is expected to partially open on Dec. 24.

The licenses for duty-free operation have been regarded as a golden ticket for retailers seeking new growth engines amid the sluggish domestic market.

In 2014, duty-free stores in Seoul posted combined sales of 4.4 trillion won.

But investors have raised concerns over a revised regulation that shortened the contract period of duty-free operation to five years from 10 years.

“Duty-free store business was widely deemed a golden goose for companies to expand their footing in the retail industry. But now it is considered a temporary business as the operators need to get a license renewal every five years from the government,” an analyst said.

Yang Ji-hye, an analyst at KB Investment Securities, said that the Chinese government’s new policy to nurture its own duty-free stores could add more uncertainties to the business,

HDC Shilla Duty Free is also facing challenges to attract major luxury brands like Chanel, Hermes and Louise Vuitton before they fully open their stores next year.

Ha Joo-ho, Hotel Shilla’s managing director said that negotiations are underway with the brands, but none of them have confirmed being in the store.

“Luxury brands are expected to open in our duty-free store by the second half of the next year,” he said in an interview.

By Park Han-na (hnpark@heraldcorp.com)