Feasibility Studies for Real Estate using GIS in South Korea (Retail/Office)

If you might be thinking about acquiring a building or piece of property in South Korea you may wish to perform a highest and best use analysis with a GIS consultant to determine what might be feasible at your site's given location.

BUT WHY USE A GIS CONSULTANT?

A GIS consultant can visualize anything.

Take for example the GIS map (left) or the chart (right). The GIS map allows the data in the chart to the right (sourced from 세움터) to be visualized in order to provide clients a more accurate, compelling, and digestible analysis/story as it is related to their specific project's location.

The following process is recommended to conduct a highest and best use study.

1. SITE SWOT ANALYSIS

GIS NOTE: A GIS consultant can develop high-quality maps that illustrate a site's relative location to city plans/initiatives and private sector developments in addition to accessibility (drive time).

Legal / Site Characteristics
Check (http://www.onnara.go.kr/) for land use and current building/site details (e.g: size, shape, "건폐율" (coverage ratio),"용적율" (FAR));
Check (http://luris.molit.go.kr) for more detailed information in regards to local land-use laws
City Planning / Real Estate Development / Transportation
Check (http://www.eais.go.kr/) to see what major development projects may have been completed or are under construction within proximity of your project site
Check local news for "부동산개발" (real estate development) or "도시계획" (city planning) "neighborhood, district, city name" to assess what major plans might be in place that could negatively/positively influence your project (e.g: transportation improvements, other masterplans, etc).

2. FEASIBILITY STUDY

Retail
Demand

Assess demographics such as population/household and growth trends (http://kosis.kr/) by "동" (neighborhood) or sub-neighborhood level (http://sgis.kostat.go.kr), pending on the size/scope of the project;
Calculate estimated spending per capita/household to determine the total market. Account for potential retail leakage (spending that may not occur at brick-mortar establishments, etc). Reference secondary sources such as KOSIS or conduct primary research if necessary;
Calibrate distance decay factor "how far will patrons/demand travel to visit similarly positioned projects" by using prior research or conducting primary research for input into Huff Gravity Model (e.g: survey).
Supply

Assess competitive supply to determine what gaps may exist in the market. Conduct primary research to determine performance and attractiveness of comparables for input into Huff Gravity Model if necessary;
Develop tenant mix, pricing/positioning strategy around existing and planned competition.
Outputs
Retail sales potential / Capture rates;
Supportable floorspace;
Trade area map (can be used for marketing to see where majority of customers may originate from);
Retail rental rolls based on supportable floorspace and estimated occupancy levels.

Office

Demand

GIS NOTE: A GIS consultant can analyze micro-level office data at the building level to develop a more accurate feasibility/cash-flow analysis than using high-level/city-level data you'll see in traditional market reports. See the map below from MatePlus' 2017 Q3 Market Report as a sample as it shows rental rates by building and location in Seoul's CBD.

Assess total office space available, vacancy, rental. Estimate office worker space per square meter, and total number of employees.
Forecast estimated demand using historical growth rates.
Supply
Follow similar process as "Retail" "Supply" to assess performance of comparables in the market and determine gaps or opportunities that may exist (e.g: office building amenities, services, floorplate layout/design, parking, etc).
Outputs
Forecasted office space demand, warranted floorspace, and estimated rent rolls;
Estimate capture rate of total market based on existing and planned supply.