Abstract
Many residential projects that receive publicly recognized awards for their architectural design and are built alongside monotonous public housing in Singapore present a unique opportunity to analyze the economic spillovers of design awards in the multifamily residential context. The difference-in-differences approach is utilized to estimate the design award’s effects on market prices of nearby public housing. Analysis results show that prices fell by 2% for public housing units within a 300-m radius of award-winning residences and sold during the first year after awards were given. In contrast, neither actual completion of award-winning residences nor the completion of non-awarded condominiums with good design led to a significant price change. These results provide suggestive evidence that the dominating channel for negative economic spillovers is winning an award rather than congestion from new residential developments or good design itself. Furthermore, price reduction was significant only for newer public housing units with better design attributes compared to older ones. This suggests that the economic spillover of design awards is negative when surrounding housing units are potentially comparable and substitutional with award-winning residences and have a limited possibility for self-improvement through upgrades or redevelopment. A potential explanation is that envy based on the comparison with a neighboring residence receiving a publicly recognized design award may play an influential role in conspicuous housing consumption.
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Notes
Housing and Development Board refers to the statutory board of the Ministry of National Development that is responsible for public housing as well as public housing itself in Singapore.
More recently, the HDB has begun efforts to enhance diversity in public housing design and rejuvenate existing HDB towns. Still, the design of the majority of public housing projects remains monotonous.
Given that public housing in Singapore is the home of approximately 80% of the resident population, it is not associated with the same type of stigma typically prevalent in public or social housing in Anglo-American cities (Sin 2002).
The HDB retains power to selectively demolish and rebuild old HDB precincts under a policy known as the Selective En-Bloc Redevelopment Scheme (SERS), with an objective to rejuvenate old estates.
A term used in Singapore is five Cs, which refers to condominium, car, country club membership, cash, and credit card. Some Singaporeans aspire to the five Cs in their pursuit of material wealth and visible status (https://en.wikipedia.org/wiki/Five Cs_of_Singapore). Singaporeans also appear to be very sensitive to public recognition. Ooi et al. (2014) demonstrate that publicly reported construction quality scores have a significant effect on housing price premium and appreciation.
While the direct new sales from the HDB are heavily subsidized, resale prices of public housing in Singapore are determined by demand and supply in the open market after the 5-year minimum occupation period. The resale prices of Pinnacle@Duxton that reached over S$1 M in 2016 are quite comparable to those of condominiums. To maintain the sample size, these two public housing projects are included in the main sample and the robustness check is done with the sample excluding them. All monetary values in this paper are expressed in Singapore dollars and the exchange rate in December 2017 was S$1 to US$0.75.
News articles are usually released right after the award ceremonies where award announcements are made.
The price gradient using residuals from the log price regression that includes all controls but excludes the distance to award-winning residences shows a very similar pattern.
There are 23 HDB towns in Singapore and the size of these towns varies between 4.12 and 13.09 km2.
The coefficients of the log-linear model have a simple and appealing economic meaning because they can be interpreted as approximately the percentage change in public housing prices given a unit change in the independent variables that are continuous.
The floor area is expected to be positively related to selling price, while the building age will have a negative price impact. In a high-rise living environment, housing prices are expected to be related positively with the floor level because units located on the higher floor tend to have a better view, are airier, and are less exposed to visual intrusion from neighboring buildings (Munneke et al., 2011). The squared term of these variables are also included in the models to account for the possibility of their nonlinear effects on the public housing prices.
These are commonly used spatial characteristics for hedonic price model specifications and both of them are expected to increase housing premiums in the context of Singapore. In addition, spatial fixed effects are used to further absorb the effect of unobserved characteristics between towns within Singapore.
Different time windows have been employed including 2 and 3 years and results are reported later. In most studies on the price effect of neighborhood (dis)amenities (Linden and Rockoff 2008; Pope 2008; Kim and Lee 2018), the maximum time horizon is 2 or 3 years because the longer analysis is likely to invite too many confounding factors.
There is one property that received the award 7 months before the completion. All other properties received the award at least 5 months after the completion. The structure and design are all visible around 7 months before the completion, so this one property will not drive a signficant difference. Still, to consider potential effect, the analysis is done with the sample excluding this property and results remain consistent.
Results from the longer-term analysis of the completion effect are available upon request. They reveal null longer-term completion effects on public housing within a 300-meter radius from award-winning residences. Because of the potential concern on overlapped time periods with the post-award effect, they are not presented.
One may argue that awards may also increase tourism traffic or influence government regulations on nearby land parcels. Although there is no tangible evidence, tourists are likely to visit commercial places with beautiful design rather than residential buildings which are usually gated communities and not located in the downtown core in Singapore. Also, Singapore’s masterplan imposing land use regulations is updated every five years so the government cannot change them immediately after design awards are given.
Results are available upon request.
In addition, analysis results reveal the heterogeneous design award effect by the resale prices of public housing. The price reduction of public housing units near award-winning residences is higher for units in the top 33% of resale prices than those in the bottom 33% (4.2% vs 2.9%). This consistently supports the importance of the comparable and substitutional nature of the reference group to the degree of economic spillover of design awards. Results are available upon request.
The Urban Redevelopment Authority (URA) has started advocating for developers to incorporate more visually porous design into their residential projects (Toh, 2017). Such design is expected to foster the sharing of spaces and amenities and encourage greater spontaneous interactions between residents in the gated private projects and the wider community.
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The author gratefully acknowledges the research assistance of Yi Xiu Lim.
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Appendices
Appendix 1
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Appendix 2
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Appendix 4
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Lee, K.O. Economic spillover of design awards in the multifamily residential context. J Hous and the Built Environ 36, 1713–1743 (2021). https://doi.org/10.1007/s10901-021-09819-y
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DOI: https://doi.org/10.1007/s10901-021-09819-y