The effects of greenbelt cancellation on land value - The case of Wirye New town, South Korea

In 1971, South Korean government began designating urban growth boundary around the major cities (total 4,294 in 7 metropolitan areas, and total 809 in 7 small and medium sized urban areas) to control the urban sprawl, spurred by the rapid industrialization and urbanization from the 1960s. However, due to the heated development pressure within the cities, and the recognition of its inefficiency for the original purpose, the growth limit, so-called greenbelt, has been gradually canceled since the late 1990s. In response to this change, real estate market around the greenbelt has been also changed. Extant researches suggest that designating greenbelt causes land scarcity and adds amenity value, driving up land and property price within and approaching to the boundary. On the other hand, cancellation of greenbelt consequently increases developable land and eases the land scarcity, thus can be expected to decrease land value. However, when the canceled greenbelt is to be developed, the price again increases within the boundary, while generating externalities outward. Wirye New Town is one of the government-driven housing developments on repealed greenbelt, to meet the great housing demand of the southern part of Seoul. The site area is 6.8km2 , containing 42,947 housing units, and supplementary infrastructures such as new subway lines and transit malls. Its plan was announced in 2005, and the expected completion is 2017. In 2013, after partial completion, 2,949 apartments began to be occupied. 20,810 housing units have been supplied as of 2015, and 22,137 additional units are going to be provided by 2019. This change has increased average land and housing price of the vicinity by the real demand as well as the real estate speculation. While this alteration of greenbelt has affected adjacent real estate market substantially, study has not been conducted to quantify the impact. In this backdrop, this study aims to analyze the changing externalities effect of greenbelt on land price, before and after cancellation, around the Wirye New Town development, using random-coefficient multilevel modeling. The findings of the research will provide urban planners with better understanding on the economic impact of releasing greenbelt on real estate market.