Railway Financing via Urban Development

Abstract

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.

Investigation of the impact of railways on housing values; the case of Istanbul, Turkey

“…According to the Turkish Zoning Law, 500 m is regarded as the reasonable walking distance. Thus, real estate data for this study is collected within a 500-m radius from stations [16]. See Fig.…”

“…Those two case studies were selected because they are very close to each other location-wise. Both corridors have similar features such as land use around the stations and housing stock, and they have similar socio-economic, cultural and income-related features [16]. Selected two case studies can be seen in the Figure 3.…”

“…A number of 665 questionnaires are collected in total around these five stations. After the model is developed, the impact of being 1 m closer to a station is calculated, and the obtained coefficient is used for the main case study [16].…”

“…In other words, the theoretical investigation which refers to the hedonic pricing model of the related housing units seems statistically meaningful. Third, the calculation of the coefficient of determination (R^2), which is equal to 0.5733 and is a kind of acceptable value for such an exploratory investigation, asserts that the stated independent variables in modeling housing prices are able to statistically explain the related price changes around 56.62 percentage level [16].…”