Land Premium Effects of Urban Rail Transit and the Associated Policy Insights for TOD: A Case of Ningbo, China

Abstract

With considerable investments, mainly from local government budgets, the construction and operation of urban rail transit (URT) can exert significant spillover effects on the surrounding land use and land prices. In particular, China’s local governments are actively committed to developing their URT systems and promoting large-scale transit-oriented development (TOD) projects under the public land leasing policy. However, the connection between the land premium effects and TOD policy and practice is still lacking, particularly in the local government contexts, which exhibit significant policy and spatial heterogeneity. Thus, this research represents an attempt to better address this issue using the city of Ningbo as a case study. First, the premium effects of URT on land prices are examined, after which three crucial policy insights (land value capture [LVC], public–private cooperation [PPC], and urban regeneration) are proposed to enhance the effectiveness and efficiency of TOD, demonstrating its strong connection with the potential premium effects. The findings demonstrate that (1) local governments have adopted different innovative policies—with the ambition—to implement LVC; (2) assisted by PPC, the local rail transit authority can significantly amplify the premium effects, although it must still address the fair distribution of premiums across multiple stakeholders; and (3) transit-oriented urban regeneration can significantly influence land prices/land rents and subsequently generate significant gentrification, which will be further addressed by the TOD policy and practice.

The Externality Impact of Urban Rail Transit on Urban Real Estate Prices in China

“…In a longer economic cycle, along with the differences in China's economic situation and urbanization process, the impact of URT on China's land price also varies in stages. The premium effect of URT is more evident the earlier in the urbanization process [5]. Additionally, the premium impact decreases as rail transit reaches further into the suburbs.…”

“…The closer to the subway station, the higher the land price. However, the price change of industrial land caused by the impact of subway stations and lines is the smallest among all the land price changes [5].…”

“…TOD projects are frequently marketed as effective means of boosting car usage reduction and transportation utilization, while also spurring neighborhood development and improving the standard of living in other failing neighborhoods. [5].…”

“…The general view is that URT system can promote the increase of urban real estate value. By improving the accessibility and convenience of the surrounding real estate, enhancing facilities and services, unlocking urbanization potential, facilitating real estate development and urban renewal, and alleviating traffic congestion, URT enhances the appeal of surrounding areas and attracts residents, thereby increasing demand for nearby real estate and contributing to the appreciation of urban property values [5].…”

“…While the farther from the subway line, the less land price contour line is. It indicates that the sensitivity of land price decreases with the increase of distance from the subway station, and the subway station has an objective impact on land price [5]. The first-hand houses, rental prices and land purchase prices are all affected in this way [2].…”