EFFECTS OF JURONG LAKE DISTRICT ON THE EVOLUTION OF HOUSING PRICE PREMIUM OF CBD IN SINGAPORE

Abstract

The establishment of the Jurong Lake District as the second CBD in Singapore seeks to transform the west of Singapore by equipping it with more than 100,000 new jobs and 20,000 new homes, while complementing the existing Raffles CBD in supporting the nation’s economy. The effect of such a decision by the planners can typically be captured in the housing premium of properties within proximity to the Jurong CBD, and thus generate tremendous economic benefits for the region. However, there are concerns that with the decentralization of the first CBD in Raffles, the scarcity value of properties within proximity to a CBD might diminish. Hence, this study seeks to investigate the progressive changes in the housing price premium of CBD over the years, while assessing the specific impacts of the establishment of Jurong Lake District. In the study, hedonic regressions were used to ascertain and quantify the Raffles CBD premium as well as the Jurong CBD premium. Thereafter, regressions were carried out using difference-in-differences (DID) to quantify the effects of the Jurong CBD plan in Singapore on the housing premium of the Raffles CBD. The results obtained reflect the Raffles CBD and Jurong CBD premiums, and also reveal that the housing premium of properties in the Raffles CBD has been showing signs of erosion since the introduction of the Jurong CBD. In sum, the results shed light on households’ increasing unwillingness to pay for proximity to the Raffles CBD as they now have the Jurong CBD as an alternative option.