T J T L U http://jtlu.org V. 10 N. 1 [2017] pp. 263–290 The effect of the Dubai Metro on the value of residential and commercial properties Sara I. Mohammad Daniel J. Graham Imperial College London Imperial College London
[email protected] [email protected] Patricia C. Melo The James Hutton Institute
[email protected] Abstract: This paper analyzes the impact of the newly operated Article history: Dubai Metro on the sale transaction value of dwellings and commer- Received: March 26, 2014 cial properties. The effect is estimated for properties within different Received in revised form: March catchment zones of a metro station using difference-in-differences and 8, 2015 hedonic pricing methods on both repeated cross-sectional data and Accepted: July 18, 2015 pseudo panel data. Our estimates show a positive effect of the metro Available online: October 6, 2015 on sale values of both residential and commercial properties, although the effect is stronger for commercial properties. The models also reveal that the effect of the metro on the value of dwellings and commercial properties is largest within 701 to 900 meters of a metro station and is about 13 percent and 76 percent, respectively. 1 Introduction A large number of researchers have examined the effect of rail systems on property values and the range of estimates varies substantially across studies (Mohammad et al. 2013). The majority of studies sug- gests that proximity to rail stations enhances property values (e.g., Laakso 1992; Pan and Zhang 2008; Voith 1991; Weinberger 2001), some indicate a negative impact at certain locations mainly due to negative environmental externalities (e.g., Bolling, Ihlanfeldt, and Bowes 1998; Cervero 2003; Du and Mulley 2006), and a few show no noticeable effect (Gatzlaff and Smith 1993).