earticle

영어

This study focuses on finding determinants of investment return through empirical analysis of total return on individual investment and how these determinants could effect investment decisions and investment strategy. Since determinants of income returns and capital returns are different, discovered total return, which are composed of sum of those two returns, could be offset or reinforced by determinants of the each return. Seoul office market’s investment return was greatly influenced by Capitalization rate and difference of Cap rate spread which shows risk and opportunity in the real estate investment. This symbolizes, capitalization rate and Cap rate spread is not just an index reflection of the market, further more significant contributor in determining total returns. Return was also affected by holding period, investment behaviour, risk-free return rate and macroeconomics such as difference in KOSPI. But general characteristics such as location or size showed minimal impact on total returns. This study is differentiated by calculating total returns through repeat sales, influence of macroeconomics analysis and investment behaviour on returns by determinants derived from total returns. This study proves the strong relationship between capitalization rate and total returns. It also reveals factors that affect Capital value gains beyond rent increase rate and inflation rate.