THE INFLUENCE OF RESERVOIRS ON HDB RESALE VALUES IN SINGAPORE

Abstract

Despite land scarcity in Singapore, reservoirs occupy a significant amount of space in Singapore. It plays a vital role in ensuring that residents have a constant supply of water for their daily needs. Many residents live near reservoirs and thus this study hopes to identify how valuable it is for property owners to be located close to a reservoir. Another matter that the study hopes to address is whether there are different premiums associated with the different reservoirs in Singapore. This study explores the impact of the proximity to reservoirs on HDB transactions. It studies the HDB blocks located within a 1km proximity of 3 reservoirs in Singapore — Bedok Reservoir, Jurong Lake and Pandan Reservoir. A total of 6,080 transacted units were used to conduct the hedonic regression analysis. The study found that on average, residents will pay 8.3% more to be located 1% further away from the reservoirs. The result was significant at a 1% significance level. This differed from the author’s hypothesis that residents would pay a premium to be located closer to the reservoir. Residents may value other amenities such as proximity to schools and parks more compared to the proximity to reservoirs. On the other hand, when conducting the hedonic regression analysis for individual reservoirs, the results showed that there is a negative correlation between proximity to reservoirs and HDB resale values. Residents living in the proximity of Pandan Reservoir are willing to pay the most premium at 14.9% more to be located 1% closer to the reservoir. This might be due to the relatively quieter Pandan Reservoir with lesser negative externalities such as noise and air pollution compared to Bedok Reservoir and Jurong Lake which are more established with more visitors. The premium associated with Bedok Reservoir and Jurong Reservoir is lower at 3.5% and 1.1% respectively.