The Impact of Rail Transit Investment on the Residential Property Values in Developing Countries: The Case of Izmir Subway, Turkey

Abstract

Purpose The purpose of this paper is to test whether the rail transit investment in Izmir, Turkey has had positive valuation impacts on the surrounding residential properties, and to estimate the value of travel time using relevant parameters. Design/methodology/approach The necessary data were collected via a survey including all real-estate agents in the area. To test the research question, the Hedonic Price Model (HPM) is used as the research technique. The obtained parameters are also used to estimate the value of travel time. Findings The findings of the models has indicated that the proximity to rail stations was valued at $250-300 per meters, and the value of travel per hour was $1.47-1.83 on average. Research limitations/implications These findings should be checked with more consistent database using transaction process, and the mortgage loan rate which was not legislated at the time of study. Practical implications Until a mortgage loan rate is registered in turkey, the estimated parameters can be used in the cost-benefit analysis of rail transit investments in Turkey. Originality/value The theoretical premise that “any improvement in accessibility will be capitalized into the land values” is tested one more time in a developing country case whose urban environment is substantially different from those of the developed world, especially the North American cities. Furthermore, a new methodology using the HPM parameters is also suggested to estimate the value of travel time.