Abstract
Recently flatted factories have drawn attention as investment goods from developers and investors. The strengths and merits of these investments are that they are low priced and less strictly regulated. The purpose of this study is to empirically analyse the factors affecting the price of flatted factories by using the real transacted sales prices of 785 flatted factory units in Seoul and Gyeong-gi Province, Korea. A Hedonic Price Model (HPM) is employed for the study. The result finds that the price of flatted factories is affected by various factors: Location, Property, and Unit characteristics. In addition, the result outlines that flatted factories have commercial and industrial characteristics of both office buildings and factories. The result confirms that flatted factory price is affected by both industrial transportation accessibility and local transportation convenience. It also finds that property characteristics, such as gross area, age of the building, ratio of amenity facilities, core location, and parking space count are significant factors affecting the value. Moreover, the availability of floor level and two balcony unit types significantly relates to the price. Based on the results, it is also verified that the price of flatted factories is affected by factors similar to those of apartments or office buildings. This means that price decision factors of commercial and residential properties should be considered.
Highlights
In South Korea, many start-up businesses and small and medium sized companies have moved their company buildings into flatted factories due to the heavy burden of high rent in office buildings
As low interest rate policies have gained popularity in recent years, many investors began to take an interest in real estate as a way to generate stable income
Since offices and commercial buildings have become oversupplied, their rate of return is not sufficiently guaranteed and investors have begun to draw their attention to other types of real estate such as industrial buildings (Cuadrado, Zubizarreta, Rojí, Larrauri, & Álvarez, 2016)
Summary
In South Korea, many start-up businesses and small and medium sized companies have moved their company buildings into flatted factories due to the heavy burden of high rent in office buildings. As low interest rate policies have gained popularity in recent years, many investors began to take an interest in real estate as a way to generate stable income. Profitable real estate provides investors with a higher fixed income than other financial institutions. To support venture business and small and medium industry, the Korean government decided to enact favorable tax packages to firms using flatted factory buildings as their offices and financially support suppliers of flatted factories (Kim, 2016). A flatted factory building, using the official name ‘Knowledge Industry Center’ in Korea, is a workplace in
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