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WHEELS OF FORTUNE: SUBWAY EXPANSION AND PROPERTY VALUES IN BEIJING
Author(s) -
Li Shanjun,
Yang Jun,
Qin Ping,
Chonabayashi Shun
Publication year - 2016
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/jors.12284
Subject(s) - beijing , urbanization , capitalization , property value , capital city , capital (architecture) , china , population , residential property , traffic congestion , transport engineering , business , environmental science , geography , real estate , economics , economic geography , engineering , economic growth , finance , philosophy , archaeology , linguistics , demography , sociology
China is experiencing rapid urbanization. Its capital city, Beijing, experienced a 53 percent increase in population from 2001 to 2013. To address traffic congestion and air pollution, two of the most pressing urban challenges, Beijing has been investing heavily in transportation infrastructure. In particular, the subway system added 15 new subway lines with a total length of 410 km of over the 12‐year period. We quantify the capitalization of large‐scale subway construction into property values in a first‐differenced hedonic price framework while controlling for confounding factors and reverse causality. Our analysis finds a positive and significant impact of subway proximity on property values: a reduction in the distance to a subway station by 1 km increases the value of properties within 3 km of the station by 15 percent, and by 3.4 percent for properties within 3–5 km. Our analysis shows that the increase in property values can more than cover the capital cost of subway construction.