IMPACT OF COMMON AREA ON THE PRICE OF PRIVATE RESIDENTIAL DEVELOPMENTS IN SINGAPORE

Abstract

There are many aspects which influence the prices of private residential developments in Singapore. However, one particular aspect has not been extensively explored – the common area within a development. While the common area within a development would include the facilities of the development as well as void spaces, is there a collective impact this common area has on the price of the development? By building primary research data on condominiums across Singapore, literature review and hedonic price model will be utilised to run various hypotheses on the A) impact the amount of Gross Floor Area (GFA) would have on the amount of common area within the development, B) impact a higher common area per GFA would have on the unit price per square metre of the development, C) impact the varying proportion of common area within sky gardens would have on the unit price per square metre of the development, and D) whether this higher common area would result in a premium on the resale unit price per square metre of the development. The objectives set out for this research study would be to understand 1) the impact of common area in a broad and generic sense, 2) impact of common area in a unique, localised perspective in Singapore, and 3) the impact of common area after taking into account the human experience of enjoying the common area, if it causes a certain premium in the resale value. The findings of this research are largely positively correlated, as with hypothesis A & B. 1% of GFA increase would result in a 0.834% increase in common area and every extra 1% of common area per GFA results in a 0.206% increase in price per unit square metre of the development. These findings represent the crux of this research. Hypothesis C & D represent findings which expand on the core research and will be further explored within this dissertation.