BIDDING BEHAVIOR OF FOREIGN DEVELOPERS IN SINGAPORE LAND SALES

Abstract

Singapore has always been an attractive place for foreign direct investment. Foreign investors increasingly seek real estate opportunities here in Singapore. One of the ways to enter the property development market is the sale of sites via the GLS tender. This paper aims to examine the bidding behavior of foreign developers and if they are different from local bidders in the GLS tenders of residential land for a 10 years period from 2002 to 2012. Besides, it attempts to identify any location preference by foreign developers by the frequency of bids submitted.

Regression model is run to examine the influence of foreign and local JVs on the percentage bids respectively. The results also show that foreign developers did not bid more aggressively than the local developers. The formation of joint ventures (JV) did not incentivize foreign developers’ JVs to place a higher bid. A possible explanation for this behavior is the exposure to winner’s curse that resulted in more cautious bidding. Foreign developers do not reflect preference for sites that are in the central region. This is partly due to the strong demand for housing in Singapore. Lastly, a close analysis of the major few foreign developers’ bidding trend is made. It is observed that there is a sharp drop in the percentage bid submitted by major foreign developer after each winning bid.