{"id":113661,"date":"2020-01-16T11:39:43","date_gmt":"2020-01-16T04:39:43","guid":{"rendered":"http:\/\/www.siamlandbank.com\/propertynews\/property-news\/research-shows-link-between-developers-playing-golf-and-bids-for-government-auctions\/"},"modified":"2020-01-16T12:11:20","modified_gmt":"2020-01-16T05:11:20","slug":"research-shows-link-between-developers-playing-golf-and-bids-for-government-auctions","status":"publish","type":"post","link":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/research-shows-link-between-developers-playing-golf-and-bids-for-government-auctions\/","title":{"rendered":"Research shows link between developers playing golf and bids for government auctions"},"content":{"rendered":"


\nThe group of researchers say that insider trading among the top executives of real estate development firms happens on golf courses.\u00a0
\nBy analysing the public records of golf players in Singapore and the bids that developers made for government land auctions, a group of researchers said they have unearthed \u201cevidence of insider trading in the land market\u201d, reported Today Online, citing a research paper released by the National University of Singapore (NUS) Business School.
\nNUS study: Top executives of real estate development firms play more gold after GLS programmes
\nAccording to the study, the top managers of the country\u2019s real estate developers played golf with each other a lot more after the Government Land Sales (GLS) programme was announced.
\nData also showed that their winning bids for the tenders were lower by 14.4% compared to the winning bids made by those who did not play golf.
\nThe researchers said that from November 2010 to May 2014, the government suffered a shortfall in revenue of around S$147 million on average annually from the lower land prices.
\nThey believed that information regarding land bidding could have been exchanged between those managers during golf, which was later used to make informed bids to purchase land parcels from the government.
\nHowever, the study was unable to conclusively prove if the developers behaved like a cartel.
\n\u201cThis paper is among the first to find evidence of insider trading in the land market and to show that insider trading causes negative spillovers to other properties in the neighbourhood,\u201d said the research paper.
\nThe lead researcher of the study, Professor Sumit Agarwal, said that his interest in knowing how social networks form began from his days as a banker, where he observed that deals were often closed on the golf course.
\n\u201cWhile information sharing is not prohibited by law, governments whose fiscal revenue relies on a large proportion of land sale revenues must be prudent of developers\u2019 behaviour on the golf course to ensure a competitive land auction market,\u201d he said.
\nThe other members of the study are Assistant Professor Qin Yu, Zhang Xiaoyu and Professor Sing Tien Foo from the Department of Real Estate at NUS.
\nThe study looked at four data sets: government land bidding records covering residential land auctions from 1990 to 2016; top managers of all registered developer companies in the country; golf records of all golf players in the country from 2010 to 2014; and records of all private residential properties covering 1995 to 2018.
\nIt also categorised the bidders\u2019 golfing behaviour into four categories:
\nType 1 bidders were those who did not play and so had no access to information changes via golfing.
\nType 2 bidders were those who played alone or with others who did not belong to real estate firms.
\nType 3 bidders were those who played with managers from rival companies which did not place any bid in an upcoming land sale programme.
\nType 4 bidders were those who played with managers from other real estate firms, that later competed under the same land auctions.
\n\u201cIf information exchanges take place when they are together on the same golf course they are likely to be better informed about each other\u2019s bidding strategies\u2026 The fact that they both choose to bid indicates that they agree with each other\u2019s valuation. Thus, their valuations are more likely close to the true value (of the land),\u201d said the paper.
\nThe paper revealed that top managers of real estate companies played golf with each other more frequently after the government announced land sites that was to be released to the private sector.
\nIt also found out that the Type 4 bidders submitted winning bids that were lower than those submitted by the Type 1 bidders. The data also showed that private homes built by Type 4 bidders were sold at a cheaper price compared to those built by Type 1 bidders.
\nAdditionally, the research data revealed that private homes around land parcels purchased by Type 4 bidders were sold at a cheaper price compared to those located further away. The paper further concluded that the lower winning bids resulted in the government losing revenue.
\nThe researchers also found out that the more active bidders were closely connected to other active bidders.
\n\u201cGiven that active bidders\u2019 profits are highly dependent on land bidding outcomes, they are more likely to share true information with other bidders because sharing false information may lead to punishments by other bidders,\u201d the researchers said.
\n\u201cThe intensity with which development firms\u2019 top managers play golf together increases only after the land bidding has been announced.\u201d
\nThe same researchers also wanted to know if the developers who played golf with each other more often could already be part of a cartel.
\nThey assumed that an effective and sophisticated cartel could mimic competitive bidders\u2019 behaviours, but ensuring that the members would get a higher chance of winning succeeding land auctions after playing golf together.
\nMeanwhile, the Competition and Consumer Commission of Singapore (CCCS) said that the exchange of non- public commercially sensitive information between competitors can be a violation of the Competition Act.
\n\u201cSuch exchange will affect commercial decisions which should be made by individual market players independently and reduce competitive pressure among them,\u201d said the commission.\u201d
\n\u201cAs part of its ongoing market surveillance efforts to ensure compliance by businesses, CCCS will monitor market developments closely and will open a formal investigation when it has reasonable grounds to suspect the Competition Act has been infringed,\u201d it added.
\nLooking for a property in Singapore? Visit\u00a0PropertyGuru\u2019s\u00a0Listings,\u00a0Project Reviews\u00a0and\u00a0Guides.
\nVictor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email\u00a0victorkang@propertyguru.com.sg
\n
\nSource : proppertyguru.com.sg\/Property Market
\nRead more…Research shows link between developers playing golf and bids for government auctions<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The group of researchers say that insider trading among the top executives of real estate...<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true},"categories":[1],"tags":[],"class_list":["post-113661","post","type-post","status-publish","format-standard","hentry","category-property-news"],"jetpack_featured_media_url":"","jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p75ss1-tzf","jetpack-related-posts":[{"id":114047,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/government-review-found-no-sign-of-collusion-among-developers\/","url_meta":{"origin":113661,"position":0},"title":"Government review found no sign of collusion among developers","date":"February 4, 2020","format":false,"excerpt":"\r National Development Minister Lawrence Wong shared that no cases of wrongdoing was found by his ministry. A government-led review has dismissed a claim that developers have been colluding with each other when bidding on Government Land Sales (GLS) tenders \u2013 an act which National University of Singapore (NUS) academics\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":113827,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/researchers-withdraw-earlier-claim-of-insider-trading-during-golf-sessions\/","url_meta":{"origin":113661,"position":1},"title":"Researchers withdraw earlier claim of \u201cinsider trading\u201d during golf sessions","date":"January 23, 2020","format":false,"excerpt":"\r Following the Real Estate Developers\u2019 Association of Singapore\u2019s (REDAS) strong denial of the allegations of \u201cinsider trading\u201d during golf sessions, the researchers have now removed their claims in an updated version of the paper. The researchers behind a National University of Singapore (NUS) research paper claiming \u201cevidence of insider\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":113765,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/redas-strikes-back-against-nus-for-developer-collusion-study\/","url_meta":{"origin":113661,"position":2},"title":"Redas strikes back against NUS for 'developer collusion' study","date":"January 20, 2020","format":false,"excerpt":"\r \u00a0 The Real Estate Developers\u2019 Association of Singapore (Redas) has strongly denied the suggestion that the industry is engaged in insider trading, price fixing or collusion, reported Today. This strong sentiment follows the National University of Singapore (NUS) Business School\u2019s recent publication of a research paper that claimed the\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":113517,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/bids-for-jalan-bunga-rampai-and-irwell-bank-rd-gls-sites-lower-than-expected\/","url_meta":{"origin":113661,"position":3},"title":"Bids for Jalan Bunga Rampai and Irwell Bank Rd GLS sites lower than expected","date":"January 10, 2020","format":false,"excerpt":"\r Developers \u201ccontinue to adopt a more prudent approach to land bids, amid market uncertainties, ample upcoming supply, and the cooling measures which remain in place\u201d, said Tricia Song, head of research for Singapore at Colliers International. Photo: URA The Urban Redevelopment Authority (URA) has announced the closings tenders for\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":114103,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/developers-cautious-gls-bid-causes-8-20-drop-in-land-prices\/","url_meta":{"origin":113661,"position":4},"title":"Developers\u2019 cautious GLS bid causes 8-20% drop in land prices","date":"January 14, 2020","format":false,"excerpt":"\r The muted sales take-up rates seen in existing projects in the vicinity of both sites are possible reasons that developers have placed lower bids. The cautious approach employed by developers towards bidding for land has caused an 8% to 20% drop in land prices including the 5% Additional Buyer\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":28903,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/gls-bids-rise-amid-strong-demand\/","url_meta":{"origin":113661,"position":5},"title":"GLS bids rise amid strong demand","date":"October 7, 2016","format":false,"excerpt":"\r Fewer Government Land Sales launches this year has contributed to fierce competition among developers and escalating land prices. (Photo: Nikki De Guzman) The number of bids for Government Land Sales (GLS) launches has been on the rise this year amid fierce competition among developers to acquire land sites, reported\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/posts\/113661"}],"collection":[{"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/comments?post=113661"}],"version-history":[{"count":0,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/posts\/113661\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/media?parent=113661"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/categories?post=113661"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/tags?post=113661"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}