ANTICIPATORY EFFECTS OF HIGH SPEED RAIL ON INDUSTRIAL PROPERTIES: EVIDENCE FROM THE ANNOUNCEMENT OF THE SINGAPORE-KUALA LUMPUR HIGH SPEED RAIL

Abstract

This study seeks to analyse anticipative effects and proximity premiums of the announcement of the Singapore-KL High Speed Rail (HSR) on industrial property prices within its vicinity. The study determines a cut-off boundary spanning 3,000 metres from the anticipated location for the HSR - Jurong Country Club (JCC), which will be used as the treatment zone to study proximity premiums. Based on the economic theory on firms' location choice, this study adopts a difference-in-difference (DID) framework to assess the impact of 3 key announcements of the HSR on industrial properties.

Using data on properties sold before and after 3 key announcements - (1) the 2013 announcement of joint partnership between Singapore and Malaysia on the HSR project; (2) the unveiling of the HSR built location in 2015; and (3) the 2017 announcement on the handover of JCC's land for the construction of Singapore's side of the HSR station - results are used to assess anticipated net wealth benefits of the rail project to industrial properties within the vicinity. The results show that the HSR has induced a significant and positive price premium to properties within the treatment zone after the 2013 and 2017 announcements (Events (1) and (2)), but a negative price premium for that after the 2015 announcement (Event (3)). This study concludes that a 4.8% premium was estimated for industrial properties after announcement (1), a -6.1% discount after announcement (2) and a 6.0% premium after announcement (3). On the whole, the 3 key announcements have reflected an overall positive market sentiment towards the HSR and industrial properties have accumulated a net wealth (gain) of $531,840,958.30 since Event (1) in 2013.