IMPACT OF FOREIGN WORKER DORMITORIES ON NEIGHBOURING PUBLIC HOUSING PROPERTY VALUES

Abstract

Few communities welcome foreign worker dormitories. This study seeks to examine the effects of foreign worker dormitories on property values of neighbouring HDB Resale Flats. Foreign worker dormitories have long been stigmatized as undesirable developments that cause negative externalities to residential neighbourhoods. Anti-sentiments arise from beliefs that foreign worker dormitories, like all other Not-in-my-backyard developments, would lead to a myriad of social ills i.e crime, violence and abuse being intensified disproportionately.

Using a total of 2101 HDB Resale Flat transactions within 1.5km of 4 foreign worker dormitories, this research study is operationalized via a multiple regression analysis. Regression results indicate that the proximity and size of foreign worker dormitories are significant and have an impact on neighboring property values. Sample areas 1 and 2 (Cochrane Lodge and SCAL Hougang) reflect a moderate 3-4.5% increase in property prices for every 1km increase in distance. Sample areas 3 and 4 (Jurong Penjuru Dormitory and Seletar Flats) reflect a higher increase in property prices of 10-14%. Test results suggests that proper planning done by the government and planners, together with good management by dorm operators can help to alleviate NIMBY fears and mitigate the dormitories’ impact on property values. Size wise, test results indicate that homebuyers are more unwilling to reside near larger sizes of dormitories (3000 and above in capacity) as reflected by the 10.4% drop in property values.

Results of this research study will contribute to the local real estate literature as a pioneer attempt to establish the influence of foreign worker dormitories on HDB Resale Flats in Singapore. It will also enable investors, buyers, sellers, developers and valuers to make better-informed decisions with regards to the pricings of public residential properties within close proximity to foreign worker dormitories.