Eun-Sang Jung and Jun-Hyung Kim (2017-02), "The effects of building age on rent in Korea - Focusing on the 1st floor rent of non-residential buildings in Seoul Gangnam area," Journal of the Korea Planners Association, 52(1): 83-102.
Abstract
In general, it is widely viewed that the building age lessens the building value. However, the existing empirical studies do not conform to the relation between the building age and its value. Thus, this study performs several analyses under the hypothesis that the rent of building is affected by the building age combined by its location and its use. The analysis based on the survey of 824 non-resident buildings in Gangnam area shows that the building age alone is not a significant factor in determining the building rent. Rather, regression model including interaction term of “age and location” or “age and main use” reports statistically significant effect of building year. For example, if the building is located on boulevard or used for office, the age adversely affects the rent. On the contrary, if the building is located on the backside of boulevard or used for retail, the age positively affects the rent. To sum up, the view that the old building has less value, can not be generalized in all areas. It implies that it is necessary to build effective methodology to take the positive value of old buildings into consideration.
Keywords
Building age; Depreciation; Building Deterioration; Heritage Effect; Non-residential Building