Abstract
The governments of Malaysia and Singapore reached a landmark agreement in May 2010 to end the leases for the nearly 80-year-old railway lines and stations in Singapore, which were operated by Keretapi Tanah Malaya (KTM), a firm owned by the Malaysian government, with effect from July 1, 2011. This study uses the cessation of KTM railway services in a quasi-experiment design to test real estate capitalization effects of the removal of train noise externalities. Based on the non-landed housing transactions data in Singapore from January 2005 to June 2013, we find that houses located within 400 meters from the railway lines increased by 3.5% on average relative to houses located outside the 400 meters boundary after the announcement of the agreement. The removal of train noise externalities increases the prices of houses in the affected area by 13.7% on average in the post-cessation of KTM railway services. Realized economic benefits associated with the cessation of the railway services were estimated at S$0.36 billion based on houses sold in the post-KTM period.
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