A study on determinants influencing price of commercial property in provincial city - Focused on Jeonju new downtown -

The purpose of this study is to analyze determinants on the land price of downtown in western new town in Jeonju city, a hub of Jeollabuk-do, distinct from old town, and then propose comments regarding investment and policies. Panel analysis was employed given that variables in this study included cross-sectional features such as location and physical characteristics and variable features such as macroeconomic and demographic characteristics. The study showed that a rise in economically active population increased land price in commercial districts. This led to economic prosperity in regions, thereby boosting consumption in new commercial areas based on what modern the consumers prefer. In addition, an increase in consumer price index bolstered rising land price due to the effects of inflation hedge that involves monetary devaluation deriving from rising price. Contrary to falling interest rates, price of commercial areas saw a rise. It is thus assumed that fluctuating interest rates change purchasing capacity and operational profits actively respond to profit rates and highly relevant interest rates primarily affected by the characteristics of commercial real estate. Land price increases in proportion to the size of buildings. New western area is a hub of Jeonju, from which it can be said that the size of buildings is line with huge economy. Highly demanded by consumers, the price of land where new buildings are located gets higher. Lastly, a rise in gross regional domestic product was found to have a negative impact on land price. Despite a vital role of commercial areas in western new area in Jeonju, investment outflow towards other areas with a potential for better investment is deemed to take place due to low investment merits such as the size of buildings and future growth compared to other economically revitalized areas such as metropolitan area.