This study analyzed the factors and degree influencing the determination of the capitalization rate for the entire Seoul office building and region, which occupies the largest proportion of Korea's commercial real estate market.
As a result of analyzing the determinants of the capitalization rate of all office buildings in Seoul, NOI per ㎡, distance to subway stations, and regional coefficient values were positive, while transaction price and year coefficient values were negative.
In the case of the Seoul office building purchase method, indirect investment shows a lower Cap. Rate, and it can be estimated that indirect investment puts more weight on the future value of indirect investment due to the tendency to buy at a relatively higher price and less sensitive Cap. Rate. In the case of nationality of purchase, foreign investors show a lower Cap. Rate. It can be estimated that foreign investors also buy at a relatively higher price than domestic investors and put more weight on future value.
As a result of analyzing the determinants of the Cap. Rate of office buildings in the Gangnam area (GBD), NOI per ㎡ and the coefficient of distance from subway stations were positive. As a result of analyzing the determinants of the Cap. Rate of office buildings in urban areas (CBD), the coefficient value of NOI per ㎡ had a positive value, while the coefficient value of transaction price was negative.
Based on the results of this study, the following factors determine the Cap. Rate, an indicator for reasonable purchase by buyers when trading office buildings in Seoul.
First, the effects of transaction price and NOI, two variables of the formula for calculating the capital return rate (Cap. Rate), were found to be high in both Seoul and in each region through regression analysis of transaction data. It was confirmed that even in the actual trading market, trading entities are applying transaction price and NOI variables as important judgment factors in trading.
Second, as a result of analyzing the differences in the determinants of the Cap. Rate across Seoul and each region, it was found that there were differences in the Cap. Rate determinants according to the location and environmental variables of each region. In particular, in the case of distance variables to subway stations, all regions except the urban area (CBD) had a positive effect on the determinant of the Cap. Rate, but meaningful results were obtained that did not affect the urban area (CBD). Accordingly, it was found that the distance variable to subway stations, which is a determinant of the Cap. Rate, can be used as an important variable to be considered in office building transactions by Seoul area to help determine the purchase.
Third, this study data was from 2013 to 2019, and the transaction year had a negative effect on the determinants of the Cap. Rate. As time elapses since 2013, the Cap Rate has been on the decline, indicating that the increase in transaction prices is higher than the increase in NOI.
Finally, the analysis showed that the building characteristic variables such as transaction area, completion year, total floor area, building/closing rate, volume ratio, purchase nationality, location, and environmental variables did not have statistical significance in the influence of Cap. Rate determinants. In particular, in the urban area (CBD), the relatively highest probability was found compared to other areas. It is estimated that foreign investors are buying CBD office buildings at relatively higher prices through indirect investment and putting more weight on future value. As interest in the surrounding environment along with the working environment is gradually growing in the office building market, it is necessary to consider surrounding environmental factors such as the presence of parks and the Seoul Metropolitan Express Railway (GTX).