AN EXAMINATION OF LAND OPTIMISATION OF COMMERCIAL OFFICE SPACES IN SINGAPORE

Abstract

Singapore is a rapidly developed nation with dynamic economic diversity, which has led to its rise in social and economic status in the world. In view of its chronic land constraint and strong international economic competition, Singapore has been facing the dilemma of land use optimization in a bid to remain competitive. Seeking to understand the relationship between land use optimization and commercial office spaces, this study examines the dynamics of the commercial office market in Singapore from the first quarter of 1988 to the third quarter of 2014 by examining the relationship between the output of business firms or producing plants and the bid rents that firms need to pay. An important implication of this study is that the understanding of such dynamic equilibrium relationship will be vital in the future optimization of land uses in the commercial office sector. This is important as it can help to model land use policies with respect to maximizing the Highest and Best Use (HBU) of land, which will eventually maximize society’s welfare and utility. This could better assist the Singapore Land Authority (SLA), a statutory board, whose mission is to optimize land resources for the economic and social development of Singapore. An error- correction mechanism is incorporated to account for the short-run deviations from their equilibrium relationship among the factors concerned.