EFFECTIVENESS OF INDUSTRIAL GOVERNMENT LAND SALES (IGLS) PROGRAMME ON INDUSTRIAL PRICES

Abstract

The industrial sector has always been the fundamental driver of a healthy economy. The timely and sufficient provision of necessary infrastructure to industrialists is one of the key components in ensuring continued growth in production levels. The Industrial Government Land Sales (IGLS) programme is the main source of state land supply for industrial development in Singapore. This paper seeks to study its effectiveness in moderating industrial prices. This paper investigates the long-run and short-run relationships between land supply through the IGLS Programme and industrial prices. The study period spans over 98 quarters between 1997 and 2017. Macroeconomic variables from 1993Q2 to 2017Q3 would be employed to study their influence on the industrial property price movements over the years. Error Correction Model (ECM) is being employed in this study to study the impacts of the cumulative land area released under the IGLS Programme on industrial prices. The empirical findings show that industrial prices are negatively influenced by the cumulated amount of state land released in the long-run. Therefore, it can be concluded that the IGLS Programme is an effective market stabilisation tool in correcting industrial price deviations in the long-run. However, increases in land supply only led to short-run price corrections in the second lagged difference due to a supply- lag in the industrial market. Hence, it is crucial for the government to monitor the market closely and release industrial land timely to achieve sustainable industrial prices in the long-run.