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Housing units located near transportation facilities tend to have a higher market value than those that are at a greater distance to transport facilities but have similar characteristics. Provision of public infrastructure has a great impact on urban areas, especially on urban development patterns, spatial distribution of urban land use and real estate values. Mass transit systems are one of the most important public infrastructures in cities. Mass transit operations have a significant effect on property values, since they increase accessibility in urban areas. Railway projects are long-lasting investments and by their nature are extremely expensive when compared to other land transportation modes. It is not always possible or reasonable for many countries to fund these high-price projects only with their national budget generated by taxes collected from all citizens. Literature suggests that property values tend to rise in parallel to land values after any kind of public infrastructure investment. Nowadays transportation, especially railway system investments, is regarded as the most important public infrastructure in urban areas impacting land values maximally. Railway investments are becoming widespread in Turkey, especially in Istanbul as Istanbul is the most important and most populated city in country. As due to their high operation costs urban public transport systems, especially railway systems, rarely make a profit, private investors are not willing to get involved in these projects. Furthermore, it is not possible to finance all rail system investments from public funds. This article aims to prove the impact of railway systems on housing values and investigate the possibility of internalizing this increased value for financing railway investments. The main objective of this article is to calculate the impact of distance to a railway station on the value of properties by using the hedonic price model on an existing railway corridor and applying this anticipated impact on a proposed railway corridor. Finally, the calculated value is used as a preliminary basis as a funding model for railway projects in developing countries like Turkey.

Railway projects are extremely expensive and long-lasting investments. Most countries are facing difficulties funding these projects from their national budget. Such projects clearly have an impact on land use and land value. Literature shows that property and land values increase after a transport investment is made in a particular corridor. Rail system projects have the highest impact on property values, because they increase accessibility to urban areas. Rail system projects are becoming very popular in Turkey, especially in Istanbul, one of the most important and most populated cities in Turkey. Existing road, sea and rail transport systems are not sufficient to meet the demand for mobility in the city. Since urban public transport systems rarely make a profit, they do not attract private investors. Furthermore, it is not possible to pay for all rail system investments from public funds. This paper aims to develop a new model for the financing of rail systems in Turkey. The main aim is to calculate with a Hedonic Pricing model the impact of the proximity of a property to a station of a rail system on the value of that property, and then to reflect this impact on a proposed rail system project in Istanbul. In the Hedonic Pricing model, properties are characterized by their composite attributes, thus the value of a property can be calculated by adding up the estimated value of all its separate attributes. This model makes it possible to calculate the impact of each and every attribute of a property on its value. In this study the distance to a metro station is the primary attribute with other structural features also affecting property value. The model is run with 11 attributes. As a result of this model a coefficient can be calculated that relates to the impact of distance to a station on the value of the property. As a further research, recommendations will be developed to use this calculated value in the financing of railway project.

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