The Impacts of Rail Transit on Property Values: Empirical Study in Beijing

Though most studies confirm the positive impacts of the rail transit on property values, a few studies report the insignificant impacts. It is suggested that the submarket effect is an important factor that causes the mixed conclusions. Using hedonic price method, our empirical study on Batong line of Beijing verifies this idea. The article also puts forward that the submarket effect is the integration of two opposite effects. The Effect Ⅰ, which comes from the convexity of bid-rent curve, causes the greater impact of the rail transit in CBD than that in suburb. However, the Effect Ⅱ originating from the law of diminishing marginal returns produces the opposite impact. The difference between the bid-rent gradients of the commercial and office sector and that of the residential essentially shifts the relative magnitude of these two effects. As for the commercial and office property, the impact of the Effect Ⅰis greater than that of Effect Ⅱ, that causes the value premium higher in CBD than that in suburb. While for the residential, the impact of Effect Ⅱ dominates so the premium in suburb is higher.