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

Author

Listed:
  • Sumit Agarwal

    (Georgetown University)

  • Jing Li

    (Singapore Management University)

  • Ernie Teo

    (IBM Research)

  • Alan Cheong

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

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 dataset 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 geographic distance. Tracking sequential bids submitted by the same developer over time, 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.

Suggested Citation

  • Sumit Agarwal & Jing Li & Ernie Teo & Alan Cheong, 2018. "Strategic Sequential Bidding for Government Land Auction Sales – Evidence from Singapore," The Journal of Real Estate Finance and Economics, Springer, vol. 57(4), pages 535-565, November.
    • Handle: RePEc:kap:jrefec:v:57:y:2018:i:4:d:10.1007_s11146-017-9625-0
    DOI: 10.1007/s11146-017-9625-0
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    3. Shao-Chi Fang & Wen-Chih Yeh & Chun-Chang Lee & Zheng Yu, 2021. "Factors Affecting the Price of Cost-Equivalent Land: Application of Hierarchical Linear Modeling," Land, MDPI, vol. 10(7), pages 1-23, June.

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