34 Pages Posted: 2 May 2014 Last revised: 23 Sep 2015
Date Written: September 15, 2015
Since 1998, Singapore has had an Electronic Road Pricing (ERP) system set up with a network of toll gantries to tax vehicles entering designated areas in the city center during peak hours. Using the congestion rate hike with effect from November 1, 2010 as an exogenous shock, we test the effects of the ERP rate hike on retail, office and residential real estate prices. The results show that the November 2010 congestion toll rate increases cause a 19% drop in retail real estate prices within the cordon ERP areas relative to retail real estate prices outside the cordon ERP areas. The results are statistically and economically significant. However, the toll rate hike has no significant impact private office and residential real estate within cordoned ERP areas. The robustness and falsification tests could not reject the negative effects associated with the toll rate hike on retail real estate prices.
Keywords: Congestion Tax, Traffic Management, Electric Road Pricing (ERP), Externality Effect, Real Estate Prices
JEL Classification: D1, R3, R4, R5
Suggested Citation: Suggested Citation
Agarwal, Sumit and Koo, Kang Mo and Sing, Tien Foo, Impact of Electronic Road Pricing on Real Estate Prices in Singapore (September 15, 2015). Available at SSRN: https://ssrn.com/abstract=2432052 or http://dx.doi.org/10.2139/ssrn.2432052