Operating cost efficiency of different size sectional title development schemes

29 July 2014

The purpose of the study was to estimate the relative efficiency of different sizes of residential Sectional Title Development Schemes (STDSs) in order to minimise operating costs. Since area (m2) and the number of units in an STDS were found to be equally important drivers of operating costs, data envelopment analysis was used to estimate the efficiencies of a sample of 113 STDSs where the two measures of size were used as output variables and six categories of operating costs were used as input variables. It is evident that smaller STDSs tend to be more efficient in minimising operating costs than larger STDSs. Furthermore, it is also evident that economies of scale generally do not exist. The main limitation was that the role of a categorised scale of basic housing (lower market) or the scale of luxurious housing (upper market) was not considered.