Determinants of Rental Price for Retail Properties in Seoul

Abstract

1. CONTENTS (1) RESEARCH OBJECTIVES The purpose of this study is to empirically analyze the determinants of rental price for retail properties using macroeconomic variables. (2) RESEARCH METHOD This study conducted an empirical analysis of the determinants of rental price using the vector autoregressive model (VAR). The dependent variableis the rental price index for mid- and large-sized retail properties in Seoul, and the independent variables are macroeconomic variables such as corporate bond yields, the number of economically active population, and the amount of domestic construction orders. (3) RESEARCH FINDINGS As a result of the cointegration test, there was a long-term balance relationship between the variables, so it was analyzed using VECM. As a result of the impulse response response analysis, the amount of domestic construction orders and corporate bond yields in the retail rental price were negative (-), and the number of economically active population was positive (+). In addition, as a result of the variance decomposition analysis, it was analyzed that the impact of the corporate bond yield was the greatest when excluding the retail rental price itself from the retail rental price. 2. RESULTS An increase in the number of economically active population, a proxy variable of income and economic conditions, increases the rental price, and an increase in domestic construction orders, a proxy variable of supply, and an increase in corporate bond yields, a proxy variable of liquidity, decrease the rental price.