This study aims to analyze factors that affect the price of factory land, which is the basis of the manufacturing industry in Gyeonggi-do, which is recognized as the center of manufacturing in Korea, and to present the standards for investor owner policymakers based on the analysis results.
The implications based on the summary of the analysis results of this study are as follows. First, factory land is land used in the manufacturing industry, and higher inflation may increase the price of manufactured products, but production companies are expected to increase corporate profits as product prices rise, and factory land prices are expected to increase. Due to COVID-19, the amount of money has increased as interest rates have been lowered, and high prices have been maintained. Demand for factory land is expected to increase in the future as high inflation is expected to continue for the time being.
Second, Korea is an export-led country, but the export growth rate has continued to stagnate recently. According to economists, the global economy is expected to rise from the first half of the year, especially the export-led Korean economy is expected to improve as the global economy recovers, and Korea, which has the strength of the development of the fourth industry, is expected to boost exports. Accordingly, the demand for factory land is also expected to increase.
Third, in the case of exchange rate (ER), the current exchange rate (ER) to the United States is significantly high. Domestic export performance with an export-led economic structure is suffering from extreme difficulties. Even with the same amount of exports, the amount of exports has significantly decreased due to the strong dollar exchange rate (ER). This is having a negative impact on the manufacturing industry. However, since the exchange rate (ER) effect by this strong dollar is one of the temporary policies to curb high inflation, the U.S. inflation is expected to stabilize in the future and the exchange rate is expected to continue to decrease in the first half of 2024, which is expected to boost Korea's manufacturing industry.
Fourth, in the case of interest rates (IR), South Korea is currently implementing a policy of increasing the total amount of money in order to recover from the COVID-19 but rapidly increasing interest rates in 2022 and 2023 in line with the U.S. Fed's high-interest policy. However, interest rates are expected to fall sharply after the timing of a short-term high-interest policy, with the impact of interest rates on real estate expected to be quite high in the long term. And the continued decline in interest rates along with the fourth industrial revolution and manufacturing revival policies is expected to significantly increase demand for factory sites in Gyeonggi-do, the manufacturing center.
Fifth, the production labor productivity index will continue to increase due to the Fourth Industrial Revolution. Productivity increases compared to the unit labor force, in other words, as human labor is replaced by robots and AI, the demand for factory land in Gyeonggi-do, which is the center of Korea's high-tech manufacturing, is expected to continue to increase.
Sixth, the domestic manufacturing industry is greatly affected by international changes, and there is a negative uncertainty about the increase in factory land in Gyeonggi-do due to national policies such as tax benefits, site provision, core strategic industries development, industrial regulations, and balanced regional development policies.