The Impact of Mass Transit System on Property Values in India

Abstract

The capitalisation of transit access in property values has long been investigated by property researchers and policy analyst. A premium in property price induced by transit services measures the rate of capitalisation and indicates positive impact of transit investments, which can be used to develop transit-based policies such as value-capture and transit-oriented development strategies. Land development impacts of mass transit have long been studied in the developed economies. Yet relatively little is known by the outside world about the Indian experience due to IndiaÕs rather short history in the development of mass transit and real estate market. This paper attempts to fill the gap by presenting evidence from India, with a detailed case study of Jaipur Metro Rail Corporation by selecting two transit lines in Jaipur, the study examined land development context and estimated hedonic housing price models to measure the proximity premiums associated with these metro lines. The empirical evidence shows that investments in mass transit can have significant and positive impacts on land development. Properties with transit proximity enjoy sizable price or value premiums. The research findings underscore the importance of introducing zoning and other land regulatory changes prior to the initiation of transit projects as well as applying value-capture tools to help finance investments and redress inequities.