DETERMINANTS OF INDUSTRIAL LAND PRICES - THE CASE OF GOVERNMENT LAND SALES

Abstract

This study examines the determinants of industrial land prices in the case of Government Land Sales (GLS) in Singapore. It contributes to the existing body of knowledge as it deviates from the conventional focus on residential GLS market and examines the Industrial Government Land Sales (IGLS) market. In particular, the objective of this study is to examine the impact of site attributes and developer characteristics on industrial land bid prices. The study postulates that site attributes would have significant impact on industrial land bid prices while heterogenity of developers would result in different bidding behaviour and hence varying impact on prices. Two hedonic regression models were used to detemine the relationship of different variables on industrial land bid prices. The findings reveal that traditional site attributes have a significant relationship, which is consistent with existing studies while site attributes specific for industrial developments are also significant in influencing bid prices. For developer characteristics, public listed companies and joint venture bids share a statistically significant and positive relationship with land bid prices. Notably, the findings also reveal the use of consequential land bidding strategy by industrial bidders to attain market power in a locality. This provides concrete insights on the determinants of industrial land prices, which can be used to fine-tune cost control measures for the IGLS Programme.