Can Long-Distance Rail Accessibility Affect the Real Estate Market?

Can Long-Distance Rail Accessibility Affect the Real Estate Market?

Francesca Pagliara (University of Naples Federico II, Italy) and John Preston (University of Southampton, UK)
DOI: 10.4018/978-1-4666-1924-1.ch014
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Abstract

Most studies present in the literature have analyzed local transit networks and their impacts on land values. Empirical studies of the effects of long-distance rail accessibility on real estate prices are relatively rare. The Channel Tunnel Rail Link in England is presented as an example of such impacts. Hedonic price theory is used to estimate the implicit price of each dependent attribute. Ad hoc catchment and control areas have been defined around the St Pancras High Speed station. The main outcome of this analysis is that access to High Speed Rail has an impact on residential property prices, while, with increasing distance from the station, other attributes affect residential property prices.
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Introduction

The introduction of a rail transit investment brings benefits to the transportation system and to the accessibility of the population to employment, retail, and recreation activities. Rail transit investments also introduce a variety of impacts to the area around the rail alignment. One of the most significant impacts of a rail transit project is the impact on property values. Numerous accounts of recent experiences with the impact of rail transit on property values have surfaced within the past two decades with varied results and general conclusions based on the local conditions of the rail transit systems studied (Armstrong and Rodriguez, 2006). One of the more prominent ways that people understand the value of property is through the price or value of a home that they own or in the rent that they pay. Any factor that increases the length of travel time to other locations near the rail system will unnecessarily reduce the accessibility provided by the rail transit investment. This reduction in the value of rail transit will result in lower than potential property value increased (Greengauge 21 2006).

These concepts can be moved to a wider territorial scale, i.e. to investments in High Speed Rail (HSR). Promoters of HSR line development usually stress its benefits as meeting a growing demand for travel while reducing congestion and pollution and supporting spatial planning for improving regional economies (Bonnafous, 1987; Blum et al., 1997). Some examples of the impacts of HSR on property values are reported in Table 1.

Table 1.
Some case studies in the literature
Location (Author, year of publication)High Speed RailAnalyzed
property price
Impacts on property prices
Japan (Nakamura and Ueda, 1989)ShinkansenLand for commercial useThe Growth rate of prices of land for commercial use amounted to +67%.
Spain (Farina,
Lamiquiz and Pozueta, 2000)
AVE (Madrid - Sevilla)All types of buildingsThe studies showed that in Ciudad Real, coinciding the arrival of the AVE link, the highest increase real estate values has been recorded in the historical area and area close to the station. In the case of Puertollano the difference in price/sqm between the Central area and the area at the west of the railroad is 2.5 points, while in Ciudad Real, the difference between the most expensive and the cheapest is 1.3 points.
France (Bazin, Beckerich and Delaplace, 2007)TGVHousesIn the X arrondissement of Paris, where there is the HS station of the Est-europeenne line, between the 2006 and 2007 (when the station was opened) there was the smallest increase of property prices (+2.18%), while between 2003 and 2004 it was of +19.35%. The percentage change in this area is less than the average citizen.
Italy (Scenari Immobiliari, 2007)TAV (Turin - Milan)HousesIn the district of Cit Turin, was in 2006 a percentage increase of property price of 30,46%, a value higher than the average value of the whole city (9.52%).

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