Sea level rise risks, adaptation strategies, and real estate prices in Singapore

Abstract

This study exploits the Singapore Prime Minister’s announcement of the areas affected by sea level rise (SLR) within the country and its adaptation strategies valued at 100 billion Singapore dollars. Utilizing transaction-level data with exact locations, we find that public housing prices dropped by 7.2% in SLR areas four years after the announcement relative to non-SLR areas. In SLR areas with adaptation, the price depreciation was mitigated to 0.6%. In the private housing sector, freehold properties benefit more from adaptation strategies than leasehold properties. We calibrate the long-term discount rates before and after the shock at 2.27% and 2.14% in SLR areas and 2.35% and 2.12% in SLR areas with adaptation, respectively. (JEL H43, R21, R28, R38, R51, Q54)