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Light at the end of the tunnel:The impacts of expected major transport improvements on residential property prices

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  • Helen XH Bao

    (University of Cambridge, UK)

  • Johan P Larsson

    (Department of Land Economy, University of Cambridge, UK
    Centre for Entrepreneurship and Spatial Economics (CEnSE), Jönköping University, Sweden)

  • Vivien Wong

    (University of Cambridge, UK)

Abstract

Properties near public transportation systems are usually sold at a premium owing to the willingness of firms and people to pay for access to workplace and leisure. However, the economic impact of major infrastructure investments remains an empirical question plagued by identification issues. We investigate the economic impacts of a major transportation development project currently under construction in Hong Kong: the Tuen Mun–Chek Lap Kok tunnel, namely the effects on property prices of the expansion of the regional road network in the Greater Bay Area. We identify a significant accessibility premium well before the tunnel is completed. There is also a change in market structure of increased preference for residential property in areas closer to the tunnel, reflected by higher price appreciation. The findings help guide urban planning and public investment decisions, as well as the design and implementation of land value capture policy.

Suggested Citation

  • Helen XH Bao & Johan P Larsson & Vivien Wong, 2021. "Light at the end of the tunnel:The impacts of expected major transport improvements on residential property prices," Urban Studies, Urban Studies Journal Limited, vol. 58(14), pages 2971-2990, November.
    • Handle: RePEc:sae:urbstu:v:58:y:2021:i:14:p:2971-2990
    DOI: 10.1177/0042098020967308
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    References listed on IDEAS

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    Cited by:

    1. Mikula, Štěpán & Molnár, Peter, 2023. "Expected transport accessibility improvement and house prices: Evidence from the construction of an undersea road tunnel system," Journal of Transport Geography, Elsevier, vol. 111(C).
    2. Rojas, Alexandra, 2024. "Train stations’ impact on housing prices: Direct and indirect effects," Transportation Research Part A: Policy and Practice, Elsevier, vol. 181(C).
    3. Akbari, Saloomeh & Polyakov, Maksym & Iftekhar, Md Sayed, 2023. "Capitalised nonmarket benefits of multifunctional water-sensitive urban infrastructure: A case of living streams," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 67(04), August.
    4. João Monteiro & Ana Clara Carrilho & Nuno Sousa & Leise Kelli de Oliveira & Eduardo Natividade-Jesus & João Coutinho-Rodrigues, 2023. "Do We Live Where It Is Pleasant? Correlates of Perceived Pleasantness with Socioeconomic Variables," Land, MDPI, vol. 12(4), pages 1-20, April.
    5. Štěpán Mikula & Peter Molnár, 2022. "Expected Transport Accessibility Improvement and House Prices: Evidence from the Construction of the World’s Longest Undersea Road Tunnel," MUNI ECON Working Papers 2022-05, Masaryk University, revised Feb 2023.

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