New rail transit projects and land values: The difference in the impact of rail transit investment on different land types, values and locations

Abstract

This study explores differences in the effects of rail transit investment across various types of lands with different values and locations, using the development of Seoul Metro Line 9 (SML9) in Korea as a case. Seoul Metro Line 9′s proximity, neighbourhood and wider economic effects are assessed. A spatial autoregressive difference-in-difference (SAR-DID) model is developed to control for the issue of spatial autocorrelation, together with a standard difference-in-difference model and a quantile regression model. The findings of these analyses are as follows. First, office and apartment lands received the largest proximity and wider economic benefits from SML9 development in their respective category. Second, SML9′s neighbourhood effects are larger for lands that increased their business and development opportunities due to the opening of SML9, such as retail and low-rise multi-family house lands. Third, the proximity and wider economic effects of rail transit investment and its neighbourhood effect generally increase with proximity to a rail station. Finally, residential and commercial lands at low price levels received fewer benefits from the completion of SML9 than those at the upper price levels. These differences are related to the various factors presented in this paper, such as the amount of capital accumulated on the lands, the number of users of the network on the lands and the different nature of each type of residential and commercial land. Based on the improved understanding of the relationship between the effects of rail transit investment and land characteristics, a well-organised land use plan for new rail transit projects can be formulated. An important implication for policymakers is that a well-organised land use plan can not only regulate land uses in the area of rail stations, but is also one of key tools to promote successful rail transit projects in urban areas.