THE EFFECTS OF GOVERNMENT POLICIES AND PROGRAMMES IN THE 1990S ON THE OFFICE SPACE MARKET

Abstract

The principle rationale of this study is to investigate if the government policies and programmes in the 1990s have an effect on the office space market in the Central Area represented by four aspects, the demand, rental and capital values and the supply. The various related Government Policies and Programmes (GPP) in the 1990s were reviewed and then analysed with the performance of the office space market. Regression analysis was used to see the effects of the GPP by using it as a dummy variable. The general findings of this study were that the factors directly influencing the office space market focused more on the supply whereas the indirect factors focused on attracting demand. The rental and capital values of the office market moves simultaneously with each other. Their peak and trough was seen to be almost at identical points. However, the assumption in this study is that rental precedes capital value. The demand and supply in the 1990s was also found to be greater as compared to the 1980s. In doing the study, appropriate assumptions were made such as the different lag periods used and that rental values lead capital values. The regression analysis found government policies and programmes do have a negative effect on the demand and rentals of offices in the Central Area. A possible explanation is that the manufacturing and industrial sector may have done relatively better than the business sector due to the good response from investors to policies and programmes on this sector. Therefore, the policies and programmes should be thoroughly analysed to see its effects on all sectors of the economy rather than on a specific sector.