Seow Eng Ong, Fook Jam Cheng, Boaz Boon and Tien Foo Sing
Real estate developers often operate in oligopolistic environments. Pricing strategies must be made in an interactive framework that makes empirical evaluation difficult. This…
Abstract
Real estate developers often operate in oligopolistic environments. Pricing strategies must be made in an interactive framework that makes empirical evaluation difficult. This study appeals to economic experiments to examine how developers price their properties, especially when there is an option to market pre‐completed units. In addition, the interaction between bidding for land and pricing the end product is examined. The results indicate that competitor actions are important considerations in pricing decisions. In particular, the profit maximizing pricing strategy depends critically on being competitive, not necessarily being the most aggressive. Interestingly, pre‐completed units sell only at prices that incorporate future price expectations, and successful bids tend to precipitate more aggressive pricing. Finally, competitive bidding and pricing strategies appear to the best profit maximizing strategy.
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Muhammad Faishal Ibrahim, Fook Jam Cheng and Kheng How Eng
This paper aims to construct an appropriate automated valuation model to value Housing and Development Board resale flats in Singapore. The paper also aims to test the accuracy of…
Abstract
Purpose
This paper aims to construct an appropriate automated valuation model to value Housing and Development Board resale flats in Singapore. The paper also aims to test the accuracy of the model by comparing the values generated with actual valuations performed by a property firm in Singapore. In addition, it seeks to examine whether models for the sub‐markets of Housing and Development Board resale flats based on location or type of flat are more “sufficiently accurate” than the general model.
Design/methodology/approach
Using transacted data of 1,483 HDB resale flats, a hedonic price model is used to estimate housing price. The variables adopted include floor area of the housing unit, floor level of the housing unit, age, distance from central business district and distance from the mass rapid transit station.
Findings
The study found that the general model provides sufficient accuracy when producing valuations. The models based on sub‐markets, namely, “location” and “type of flats” produced reasonable levels of accuracy, although more variables could be added to the “type of flats” model to improve its reliability.
Research limitations/implications
The research is limited to a few locations in Singapore. Future studies can include data from all over the island to provide better coverage.
Practical implications
The automated valuation model could bring time and cost savings, which could result in higher profit margin for property firms. Thus, valuers could spend more time on complex valuations and issues. The model can also be modified to fit other property markets with appropriate characteristics (for example, high volume transactions).
Originality/value
This paper represents an initial attempt to apply the automated valuation model in the valuation of Housing and Development Board resale flats.