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.

Keywords

Urban rail transit / Land premium effect / TOD / Land value capture

References

[1] Han B, Yang Z, Yu Y Statistical analysis of urban rail transit operation in the world in 2020: a review. Urban Rapid Rail Transit, 2021, 34(1): 5-11 (In Chinese)

[2] Lin X, Yang J. Supporting green transportation with transport impact assessment: its deficiency in Chinese cities. Transp Res Part D Transp Environ, 2019, 73: 67-75

[3] Lin X. Multiple pathways of transportation investment to promote economic growth in China: a structural equation modeling perspective. Transp Lett Int J Transp Res, 2020, 12(7): 471-482

[4] China Association of Urban Rail Transit (2022) China urban rail transit 2021 annual statistical and analysis report

[5] Knaap GJ, Ding C, Hopkins LD. Do plans matter? The effects of light rail plans on land values in station areas. J Plan Educ Res, 2001, 21(1): 32-39

[6] Mohammad SI, Graham DJ, Melo PC A meta-analysis of the impact of rail projects on land and property values. Transp Res Part A Policy Practice, 2013, 50: 158-170

[7] Calthorpe P. The next American metropolis: ecology, community, and the American dream, 1993, New York: Princeton Architectural Press

[8] Scott L. Public land with private partnerships for transit based development, 1997, California: The Mineta Transportation Institute, San Jose State University

[9] Boarnet M, Crane R. L.A. story: a reality check for transit-based housing. J Am Plan Assoc., 1997, 63(2): 189-204

[10] Salvesen D. Promoting transit oriented development. Urban Land, 1996, 55(7): 31-35.

[11] Oh S, Chen N. Do public transit and agglomeration economies collectively enhance low-skilled job accessibility in Portland, or?. Transp Policy, 2022, 115: 209-219

[12] Li J, Luo X, Wang H et al (2022) Bilevel programming model for park-and-ride versus transit-oriented development: a case study of Chengdu City, China. J Urban Plan Develop 148(1)

[13] Shen J, Wu F. Paving the way to growth: transit-oriented development as a financing instrument for Shanghai's post-suburbanization. Urban Geogr, 2020, 41(7): 1010-1032

[14] Bajic V. The effects of a new subway line on housing prices in metropolitan Toronto. Urban Studies, 1983, 20(2): 147-158

[15] Xu T, Zhang M, Aditjandar PT. The impact of urban rail transit on commercial property value: new evidence from Wuhan, China. Transp Res Part A Policy Practice, 2016, 91: 223-235

[16] Bowes DR, Ihlanfeldt KR. Identifying the impacts of rail transit stations on residential property values. J Urban Econ, 2001, 50(1): 1-25

[17] Mulley C, Ma L, Clifton G Residential property value impacts of proximity to transport infrastructure: an investigation of bus rapid transit and heavy rail networks in Brisbane, Australia. J Transp Geogr, 2016, 54: 41-52

[18] Sirmans GS, Macpherson DA, Zietz EN. The composition of hedonic pricing models. J Real Estate Lit, 2005, 13(1): 3-43.

[19] Le H, Lim WL, Leong WY. Land enhancement and intensification benefits of investing in an urban rail network. Res Transp Econ, 2018, 69: 512-522

[20] Medda F. Land value capture finance for transport accessibility: a review. J Transp Geogr, 2012, 25: 154-161

[21] Yang J, Cao J, Zhou Y. Elaborating non-linear associations and synergies of subway access and land uses with urban vitality in Shenzhen. Transp Res Part A Policy Practice, 2021, 144: 74-88

[22] Ding C, Cao X, Dong M Non-linear relationships between built environment characteristics and electric-bike ownership in Zhongshan, China. Transp Res Part D: Transp Environ, 2019, 75: 286-296

[23] Bae CC, Jun M, Park H. The impact of Seoul's subway Line 5 on residential property values. Transp Policy, 2003, 10(2): 85-94

[24] Grimes A, Young C. Spatial effects of urban rail upgrades. J Transp Geogr, 2013, 30: 1-6

[25] Cervero R, Landis J. Assessing the impacts of urban rail transit on local real estate markets using quasi-experimental comparisons. Transp Res Part A Policy Practice, 1993, 27(1): 13-22

[26] Cervero R, Kang CD. Bus rapid transit impacts on land uses and land values in Seoul. Korea. Transport Policy, 2011, 18(1): 102-116

[27] Hurst NB, West SE. Public transit and urban redevelopment: the effect of light rail transit on land use in Minneapolis, Minnesota. Reg Sci Urban Econ, 2014, 46: 57-72

[28] Carmon N. Three generations of urban renewal policies: analysis and policy implications. Geoforum, 1999, 30(2): 145-158

[29] Ma Z. The Premium capture model of public investment and its distribution mechanism. Urban Problems, 2011, 3: 2-9 (In Chinese)

[30] Li X, Love P. Procuring urban rail transit infrastructure by integrating land value capture and public-private partnerships: Learning from the cities of Delhi and Hong Kong. Cities, 2022, 122

[31] Mathur S. An evaluative framework for examining the use of land value capture to fund public transportation projects. Land Use Policy, 2019, 86: 357-364

[32] Vejchodská E, Barreira AP, Auziņš A Bridging land value capture with land rent narratives[J]. Land Use Policy, 2022, 114

[33] Lin X, Yang J, Duan Y Institutional arrangement and operating mechanism of land value capture to finance urban rail transit: global experiences and China practices. China Soft Sci, 2022, 5: 87-97 in Chinese

[34] George H. Progress and poverty, 1879, New York: Robert Schalkenbach Foundation

[35] Aveline-Dubach N, Blandeau G. The political economy of transit value capture: the changing business model of the MTRC in Hong Kong. Urban Studies, 2019, 56(16): 3415-3431

[36] Huang L, Luo P, Cheng Z. Urban renewal mode based on value capture and financial sustainability: a case study of Tianjin city. China Land Sci, 2021, 35(10): 35-44 (In Chinese)

[37] Mathur S, Ferrell C. Measuring the impact of sub-urban transit-oriented developments on single-family home values. Transp Res Part A Policy Practice, 2013, 47: 42-55

[38] Debrezion G, Pels E, Rietveld P. The impact of railway stations on residential and commercial property value: a meta-analysis. J Real Estate Finance Econom, 2007, 35(2): 161-180

[39] Li J, Huang H. Effects of transit-oriented development (TOD) on housing prices: a case study in Wuhan, China. Res Transp Econ, 2020, 80: 100813

[40] Yu H, Pang H, Zhang M. Value-added effects of transit-oriented development: the impact of urban rail on commercial property values with consideration of spatial heterogeneity. Pap Reg Sci, 2018, 97(4): 1375-1396

[41] Dong H. Rail-transit-induced gentrification and the affordability paradox of TOD. J Transp Geogr, 2017, 63: 1-10

[42] Baker DM, Lee B. How does light rail transit (LRT) impact gentrification? Evidence from fourteen US urbanized areas. J Plan Educ Res, 2019, 39(1): 35-49

[43] Lin X. The supply system and governance mechanism of intercity public transportation in the great bay area, 2021, Beijing: Peking University Press 35-49.

Funding

National Natural Science Foundation of China(42001174)

the Key Project of Social Science Foundation of China(20ZDA036)

Youth Project of High-End Technology Innovation Think-Tank of China Association for Science and Technology(2021ZZZLFZB1207092)