Strategic Sequential Bidding for Government Land Auction Sales - Evidence from Singapore

Posted: 16 Nov 2018

See all articles by Sumit Agarwal

Sumit Agarwal

National University of Singapore

Jing Li

Singapore Management University

Ernie G. S. Teo

NUS Business School

Alan Cheong

Savills Valuation and Professional Services (S) Pte Ltd

Multiple version iconThere are 2 versions of this paper

Date Written: October 25, 2018

Abstract

This paper studies the extent to which equilibrium land auction prices are pushed up sequentially due to strategic bidding behaviors in government land auction sales. Using a unique data set that covers the universe of tendering prices submitted by all developers for all residential land auction sales in Singapore, we find that a tenderer's bids are significantly higher where there was a previous land parcel sold within two years and located within four kilometers.The identified price margin decreases with time and we find that the incumbent winner of a previous auction is more likely to participate in subsequent nearby land sales as compared to the second-highest bidder of the same auction. However, it does not necessarily win the subsequent sites. We argue that the incumbent deliberately bids up the subsequent land prices to gain pricing advantages to their own parcels.

Keywords: Land sale auctions; Strategic sequential bidding; Land price; Housing price; product differentiation

JEL Classification: D43; D44; L13; R31; R38

Suggested Citation

Agarwal, Sumit and Li, Jing and Teo, Ernie G. S. and Cheong, Alan, Strategic Sequential Bidding for Government Land Auction Sales - Evidence from Singapore (October 25, 2018). Journal of Real Estate Finance and Economics, Vol. 57, No. 4, 2018. Available at SSRN: https://ssrn.com/abstract=3273034

Sumit Agarwal

National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, 117592
Singapore
8118 9025 (Phone)

HOME PAGE: http://www.ushakrisna.com

Jing Li (Contact Author)

Singapore Management University ( email )

90 Stamford Road
178903
Singapore

HOME PAGE: http://www.mysmu.edu/faculty/lijing/

Ernie G. S. Teo

NUS Business School ( email )

15 Kent Ridge Drive
119245
Singapore

Alan Cheong

Savills Valuation and Professional Services (S) Pte Ltd ( email )

30 CECIL STREET #20-03
049712
Singapore

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