According to a study by NUS Business School, golf courses in Singapore hosts a lot of insider trading among the top executives in real estate development firms

The group of researchers say that insider trading among the top executives of real estate development firms happens on golf courses. 

By 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 “evidence of insider trading in the land market”, reported Today Online, citing a research paper released by the National University of Singapore (NUS) Business School.

NUS study: Top executives of real estate development firms play more golf after GLS programmes

According to the study, the top managers of the country’s real estate developers played golf with each other a lot more after the Government Land Sales (GLS) programme was announced.

Data 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.

The 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.

They 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.

However, the study was unable to conclusively prove if the developers behaved like a cartel.

“This 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,” said the research paper.

The 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.

“While 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’ behaviour on the golf course to ensure a competitive land auction market,” he said.

The 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.

The 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.

It also categorised the bidders’ golfing behaviour into four categories:

Type 1 bidders were those who did not play and so had no access to information changes via golfing.

Type 2 bidders were those who played alone or with others who did not belong to real estate firms.

Type 3 bidders were those who played with managers from rival companies which did not place any bid in an upcoming land sale programme.

Type 4 bidders were those who played with managers from other real estate firms, that later competed under the same land auctions.

“If information exchanges take place when they are together on the same golf course they are likely to be better informed about each other’s bidding strategies… The fact that they both choose to bid indicates that they agree with each other’s valuation. Thus, their valuations are more likely close to the true value (of the land),” said the paper.

The 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.

It 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.

Additionally, 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.

The researchers also found out that the more active bidders were closely connected to other active bidders.

“Given that active bidders’ 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,” the researchers said.

“The intensity with which development firms’ top managers play golf together increases only after the land bidding has been announced.”

The same researchers also wanted to know if the developers who played golf with each other more often could already be part of a cartel.

They assumed that an effective and sophisticated cartel could mimic competitive bidders’ behaviours, but ensuring that the members would get a higher chance of winning succeeding land auctions after playing golf together.

Meanwhile, 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.

“Such exchange will affect commercial decisions which should be made by individual market players independently and reduce competitive pressure among them,” said the commission.”

“As 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,” it added.

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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email