EFFECT OF INNOVATION HUB ON HOUSING MARKET

Abstract

Singapore’s adoption of a polycentric city planning structure has led to the appearance of many decentralised employment hubs. In particular, the innovation hubs such as the Jurong Innovation District is set to lead the new economy by embracing innovation and agglomerating companies of the same field together. However, while all prospects seem bright, there is an underlying housing affordability issue arising around these innovation centres. This research seeks to examine the relationship between the presence of innovation hubs and housing prices. Firstly, the paper used the traditional hedonic pricing model to find out if the housing prices are affected by the innovation hubs. Secondly, a Difference-In-Difference (DID) model was adopted to understand if there is a causal relationship. Lastly, a treatment intensity DID model was carried out to find out if the effects of the innovation hubs are uniform across the distances explored. The empirical results found that indeed, the launch of an innovation hub will lead to an increase in housing prices within the 5 km zone by approximately 6%. The positive effects decline as the distance from the innovation hub increases, where the 5 km to 10 km zone showed an approximate 4% increase in housing prices. Finally, it was found that the positive effects are found to be inconsistent over the 10 km range. To the author’s best knowledge, there is limited empirical research on innovation hubs and its relationship to housing transaction prices. Since innovation hubs are a new trend in the twenty-first century, there are many more up and coming innovation hubs in Singapore and beyond. Hence this paper hopes to provide insights into the other side of this booming new industry.