Economic Spillover of Design Awards in the Multifamily Residential Context

Abstract

Many residential projects that receive publicly recognized awards for their architectural design and are built alongside monotonous public housing in Singapore present a unique opportunity to analyze the economic spillovers of design awards in the multifamily residential context. The difference-in-differences approach is utilized to estimate the design award’s effects on market prices of nearby public housing. Analysis results show that prices fell by 2% for public housing units within a 300-meter radius of award-winning residences and sold during the first year after awards were given. In contrast, neither actual completion of award-winning residences nor the completion of non-awarded condominiums with good design led to a significant price change. These results provide suggestive evidence that the dominating channel for negative economic spillovers is winning an award rather than congestion from new residential developments or good design itself. Furthermore, price reduction was significant only for newer public housing units with better design attributes compared to older ones. This suggests that the economic spillover of design awards is negative when surrounding housing units are potentially comparable and substitutional with award-winning residences and have a limited possibility for self-improvement through upgrades or redevelopment. A potential explanation is that envy based on the comparison with a neighboring residence receiving a publicly recognized design award may play an influential role in conspicuous housing consumption.