DEMAND FOR SMALL OFFICE HOME OFFICE (SOHO) RESIDENTIAL DEVELOPMENTS IN SINGAPORE

Abstract

This study looks into the demand for SOHO residential developments in Singapore, particularly in two areas: the price premium which homebuyers are willing to pay to purchase SOHO units and the significance of different factors in influencing the purchase decision of SOHO units. The study was conducted in two stages: firstly, a Hedonic Price Model was used to investigate the variations in prices between SOHO units and other high-rise private residential developments. Secondly, a Binary Logistic Model was used to explain the relative importance of different factors in influencing homebuyers’ willingness to purchase SOHO units. Based on 5,332 housing transactions, results from the hedonic model concluded that SOHO units commanded an average price premium of approximately 14.7% over other high-rise private residential units. This finding suggested that the various benefits brought about by SOHO units played a role in inducing homebuyers’ willingness to pay a premium. Also, the study found that SOHO units located within the North region commanded the highest premium out of all regions. The binary logistic model was constructed based on a survey conducted with 204 homebuyers. Results showed that convenience due to reduced travelling time to and fro workplace was the most important attribute that encouraged the purchase of SOHO units. The findings have concluded that while SOHO units are getting popular among homebuyers, they typically appeal to a niche group of users. Given that these units are more expensive than other high-rise private residential properties, not all homebuyers will be convinced to purchase a SOHO unit. As such, the outlook and future demand for such units is said to be uncertain.