Dynamics of property value distribution in an Asian metropolis. The case of landed housing in Singapore, 1991‐2000
| DOI | https://doi.org/10.1108/14635780210433490 |
| Pages | 254-276 |
| Date | 01 June 2002 |
| Published date | 01 June 2002 |
| Author | Sun Sheng Han,Shi Ming Yu,Lai Choo Malone‐Lee,Ann Basuki |
| Subject Matter | Property management & built environment |
JPIF
20,3
254
Journal of Property Investment &
Finance, Vol. 20 No. 3, 2002,
pp. 254-276. #MCB UP Limited,
1463-578X
DOI 10.1108/14635780210433490
ACADEMIC PAPERS
Dynamics of property value
distribution in an Asian
metropolis
The case of landed housing in Singapore,
1991-2000
Sun Sheng Han, Shi Ming Yu, Lai Choo Malone-Lee
and Ann Basuki
Department of Real Estate, National University of Singapore, Singapore
Keywords Property, Valuations, Housing, Singapore
Abstract This paper seeks to explore the dynamics of the spatial distribution of landed
residential property values in Singapore in the 1990s. Topics covered include: spatial patterns
that can be discerned in the distribution of landed property values; how property values change
over time; and how government intervention influenced this dynamic property value surface. Data
are collected from the Singapore Institute of Surveyors and Valuers property transaction
database, and are analysed by using the geographic information system, parametric and non-
parametric statistics. Findings of this paper contribute to the understanding of the urban
dynamics of an Asian metropolis, especially in terms of its residential property market and
internal spatial structure.
Introduction
Metropolitan structure as measured by the surface of property values
demonstrates significant dynamics over time and space. Up to the early
twentieth century, property value surfaces in American cities, for example, can
be generalized by the monocentric pattern (Alonso, 1964). By the mid-twentieth
century, a polycentric urban form emerged and a new property value surface
had developed (Harris and Ulman, 1945; Berry et al., 1993). Today, many
American cities, such as Chicago, Los Angeles and San Francisco Bay area,
assume the polycentric pattern in their urban spatial structure (Cervero and
Wu, 1997; McDonald and McMillen, 1998). Kloosterman and Musterd (2001)
claim that polycentrism has become one of the defining characteristics of the
urban landscape in advanced economies. Polycentric urban form is also
emerging in less developed countries, although some cities in Asia can still be
described as monocentric in property value distributions in the late 1990s
(Dowall and Leaf, 1991; Dowall, 1992; Han and Basuki, 2001).
A number of factors are discussed and assessed by researchers in explaining
the variations of property values over space. In standard valuation textbooks,
for example, it is believed that location, site characteristics and usage of the
property are the main contributing factors in determining the value of a
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Academic papers:
Property value
distribution
255
property (Lusht, 1997). Empirical research reveals that distance between a
property and main functional centers and amenities, such as the central
business district (CBD), regional centers, schools and parks do play a role in
determining the market value of a property (Colwell and Sirmans, 1980; Wadell
et al., 1993; Walden, 1990; Smith, 1993). Site characteristics such as its physical
infrastructure and the socioeconomic attribute of the neighborhood also affect
property values (Walsh and Stenejhem, 1975; Berry and Bednarz, 1979). Last
but not least, the usage of the property, in terms of its title and deeds, function,
layout and design, construction quality, among others, all contribute to the
value of the property (Lusht, 1976; Asabere, 1990).
The purpose of this paper is not to investigate the wide array of factors that
shape property value surface per se. Rather, we intend to capture some
snapshots of the dynamic surface of metropolitan property values over time,
and to explore the role of government intervention in shaping this dynamic
value surface. By analyzing transaction data on landed housing over a period
of ten years from 1991 to 2000, we discover that the property value surface in
Singapore, as represented by landed residential properties, by and large,
presents a distinct clustering of high value in the central region. Government
intervention plays an important role in shaping such a monocentric surface of
landed residential property values. At the same time, we find that the dynamic
property value surface poses constant challenges to the government for
formulating innovative policies which encourage greater diversity and spread
while effectively protecting established areas.
We proceed with a literature review on property value dynamics and its
determinants. In section three, we discuss the methodology for this study,
followed by an overview of the spatial pattern of residential property
development in Singapore. Section five presents a visual pattern of the
distribution of property values island-wide, and discussions of the temporal
changes. Before conclusions are drawn in the final section, we present the
results of some statistical tests on the impact of planning on the spatial
distribution of property values.
Literature review
A monocentric pattern of land value with the highest in the city center and
gradual declining values further away from the center was empirically proven
in a number of studies. The land-value maps for Chicago in 1910 and 1930
demonstrate that values declined with distance from the CBD (Yates, 1965). An
empirical study by Abelson (1997) on house and land prices in Sydney from
1931-1989 revealed that the prices fell generally exponentially with distance
from the CBD. The gradient was steeper in the 1970s and 1980s mainly due to
the changes in the time and cost of traveling.
Over time the polycentric urban form has gradually replaced the
monocentric pattern. McMillen (1990, 1996) and McDonald and McMillen (1998)
conducted a series of research on land values in Chicago. The once monocentric
city in the early nineteenth century was no longer one in the period 1960-1990
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