*3.3. Results*

Here, to identify the factors for project site selection for private development projects, 32 insolvent PF business sites that underwent the bidding process in the private sector and had their construction suspended were investigated (Table 8) [20]. Of the 32 sites, 15 succeeded in bidding in the private sector, and 17 failed to bid. The model was further developed based on the bidding success statuses of the projects, and the location suitability factors were analysed according to the surrounding environment for the simultaneous analysis of internal and external factors. Additionally, to ensure consistency with public development projects, facilities within a 5-km radius were considered. As a result of conducting descriptive statistical analysis prior to the empirical analysis, 15 sites (46.8%) succeeded in bidding, and 17 (53.2%) failed. The ratio of the holding bonds of the project site (amount of holding bonds/amount of total bonds) was 78.1% on average, and the project site purchase rate was 91.3% on average, which indicate that the land purchase rate at the project site was relatively easy. In the case of public transportation facilities, 17 project sites (53.1%) had subways within a 5-km radius and were primarily distributed in Seoul and its metropolitan area, which is believed to have contributed to the bidding success. Furthermore, in the case of cultural and convenience facilities, cinema complexes were located within 2.47 km, on average, from the project site, and the distance to the farthest cinema complex was 14.68 km, thereby indicating that the facilities were distributed within 15-km or 20 min by car.


**Table 8.** Basic statistics.

In the analysis model of this study, the -2-log likelihood value was 71.616. Concerning the assessment of goodness-of-fit of the model, *Cox* and *Snell's R*<sup>2</sup> and Nagelkerke's *R*<sup>2</sup> accounted for 47.1% and 62.9% of the total variance, respectively. In addition, the fit of the model was verified by the Hesmer–Lemeshow test. Consequently, the Pearson's chi-square statistic was 8.945 (*p* = 0.347), thereby indicating that the fit of the model was significant.

The significant variables were the building-to-land ratio (Exp(β) = 0.004); size (Exp(β) = 1.002); subways within a 5-km radius (Exp(β) = 1.267); adjacent large-scale supermarkets (Exp(β) = 0.308); and elementary, middle, or high schools or colleges within a 5-km radius (Exp(β) = 0.968) (Table 9). In summary, when the building-to-land ratio is high, the bidding success rate decreases, and as the size of the project increases, the bidding success rate also increases. The higher the number of subway stations located within a 5-km radius, the better the connection to adjacent areas and, therefore, the higher the rate of bidding success. Additionally, the larger the size of the project, the higher the rate of bidding success, and the lower the rate of bidding success for adjacent large-scale supermarkets, elementary, middle, or high schools and colleges within a 5-km radius.


**Table 9.** Analysis results.

#### **4. Implications of the Comparative Analysis**

To ensure the economic feasibility and profitability of public development projects, the analysis used similar variables for the two project types to identify the factors considered in the implementation of private development projects. To this end, a model was constructed for each project entity, and the analysis was performed accordingly. Significant variables in the rate of approval for public development projects and the rate of bidding success for private development projects are outlined in Table 10.

**Table 10.** Comparative analysis results.


First, when increasing the total cost of a public development project and the size of a private development project, the rates of approval and of bidding success also increased. Considering that total project cost increases with project size because of the nature of real estate development projects, it would be reasonable to consider these two items as similar. That is, both public and private development projects increase their expectations of success through the principle of economies of scale. In the analysis results, subways/train stations and large-scale supermarkets are important factors to consider. These two variables had opposite results for public and private development projects. For public development projects, the rate of approval decreased with the increasing number of subways and train stations adjacent to the project site; however, for private development projects, the rate of bidding success increased. The opposite results are interpreted as differences in the project development method and the purpose of project implementation. For a public development project, it is common practice to develop on a previously secured public land rather than purchase private land. However, most of the areas adjacent to subways and train stations are located on private land. Therefore, to prevent negative effects such as civil complaints and project delays that occur in the process of purchasing private land, the development of public

land is necessary. Owing to the specific circumstances of South Korea, most development projects receive additional points in the appraisal process to secure governmental funding when the project site is public land, which has been considered in the interpretation of the results. Additionally, since most areas adjacent to subways and train stations tend to have basic infrastructure already in place, the development of the underprivileged area is more important when considering the project in terms of public interest and balanced regional development. In contrast, for private development projects, financial profitability is prioritised over economic feasibility. Therefore, the demand derived from areas adjacent to subways and train stations is predicted to be high, and development projects are mainly conducted in these areas. The rate of approval increased with the number of large-scale supermarkets in the public sector, while in the case of the private sector, the rate of bidding success decreased. This finding is thought to be the result of concerns over the increasing percentage of supply, rather than additional demand owing to excessive development around the project site and over the unsold estate due to an increase in sale price. For public development projects, unlike in the case of subways/train stations, the rate of approval increases when there are many large-scale supermarkets adjacent to the project site. Therefore, for investment appraisal approval, measures to consider competing facilities without interfering with the private sector should be explored.
