Title : Estimating Land Assets in North Korea: Framework Development & Exploratory Application
Author : Song Lim(BOK)

In this study, we present a methodology and model to estimate land prices and the value of land assets in North Korea in the absence of any data about land characteristics from North Korean authorities. Using this framework, we experimentally make market price-based estimates for land assets across the entire urban area of North Korea. First, we estimate the determinants of land prices in South Korea using data on market prices of land from the late 1970s, when it was estimated that the income level gap between South Korea and North Korea wasn’t relatively large, and from the early 1980s, when urbanization levels in both of them were similar. Second, we calculate land prices and their relative ratios for each city and urban area in North Korea around 2015 by substituting proxy variables of determinants of land prices derived through a geographic information analysis of North Korea into the function of land prices that we have already estimated. Finally, we estimate the value of land assets in urban areas across North Korea by combining the ratio of housing transaction prices surveyed in several cities in North Korea with the relative prices estimated in this research. As a result, land prices in urban areas in North Korea, looking at the relative ratio of price by city, are estimated to be the highest, at 100.00, in the Dongdaewon district of Pyongyang, and to be the lowest, at 1.70, in Poongseo County, Yanggang-do Province. Meanwhile, the value of land assets in urbanized areas was estimated at $21.6 billion in 2015, which was 0.72 to 1.33 times the GDP of North Korea that year. This ratio is similar to South Korea's in the 1974-1978 period or to China's in 2016, with an average economic growth rate of 10.8% in South Korea and 6.7% in China. Considering about a 1% economic growth rate, the land assets to GDP ratio in North Korea seems to be very high.