Institute of Fisher Center for Business and Real Estate and Economic Research Urban Economics PROGRAM ON HOUSING AND URBAN POLICY DISSERTATION AND THESES SERIES DISSERTATION NO. D09-003 LAND MARKET IMPACTS AND FIRM GEOGRAPHY IN A GREEN AND TRANSIT-ORIENTED CITY: THE CASE OF SEOUL, KOREA By Chang Deok Kang Fall 2009 These papers are preliminary in nature: their purpose is to stimulate discussion and comment. Therefore, they are not to be cited or quoted in any publication without the express permission of the author. UNIVERSITY OF CALIFORNIA, BERKELEY Land Market Impacts and Firm Geography in a Green and Transit-Oriented City - The Case of Seoul, Korea - by Chang Deok Kang B.A (Sogang University) 1992 M.C.P. (Seoul National University) 1997 M.R.E.D. (University of Southern California) 2004 A dissertation submitted in partial satisfaction of the requirements for the degree of Doctor of Philosophy in City and Regional Planning in the Graduate Division of the University of California, Berkeley Committee in charge: Professor Robert Cervero, Chair Professor David Dowall Professor John Quigley Fall 2009 Land Market Impacts and Firm Geography in a Green and Transit-Oriented City - The Case of Seoul, Korea - ○C 2009 by Chang Deok Kang Abstract Land Market Impacts and Firm Geography in a Green and Transit-Oriented City - The Case of Seoul, Korea - by Chang Deok Kang Doctor of Philosophy in City and Regional Planning University of California, Berkeley Professor Robert Cervero, Chair Many global cities are experiencing a paradigm shift in transportation investments and urban development policies. As cities continue to suffer from serious traffic congestion, blighted neighborhoods, and a deteriorating environment, some civic leaders in a few cities have switched their focus from mobility to accessibility, livability, and urban amenities. Further, compact urban development with open space and public transit enhancements is a critical component to reduce carbon emissions. To spur economic activity and improve urban environments, city leaders have turned their attention to deconstructing freeways and reforming public transit service. This study investigates the effects of two projects— freeways-to-urban greenways and bus rapid transit improvements—on land market and firm location in Seoul, Korea in the 21st century. Seoul is the first Asian city aggressively to pursue bus transit reforms as well as an urban stream restoration project along the Cheong Gye Cheon (CGC) corridor where an elevated freeway was removed in 2003. These two strategies are representative of the contemporary shift to sustainable planning and transportation policies in Seoul. 1 After reviewing related theories and empirical studies in Chapter 2, providing a historical background to urban and transportation planning in Seoul in Chapter 3, and presenting this study’s research design in Chapter 4, Chapter 5 explores how the urban greenway project in Seoul has affected land use, land values, the location choice of creative industries, and employment density since 2001. According to land use change models, parcels within 4 km of the CGC corridor were more likely to convert single- family residential use to more intensive uses such as high-rise residential, commercial- retail, and mixed units. Seoul’s freeway removal and urban greenway investment conferred net benefits to residential and non-residential land within 3 km and 600 meters of the CGC corridor, respectively. The urban greenway also played a role in attracting and retaining creative industries within 1 km, and increased employment density within 1.2 km, of the CGC corridor. Chapter 6 assesses how the BRT improvements have affected land use change, land values, the location choice of creative industries, and employment density since 2001. According to land use change models, flat-residential parcels within 500 meters of median bus-lane stops were generally more likely to convert to more intensive residential uses. Seoul’s innovative public transit conferred net benefits to both residential and non- residential markets within 300 meters of BRT bus stops. Further, exclusive median bus- lane corridors tended to attract and retain creative industries and increased employment density within 500 meters of BRT bus stops. Seoul’s experience has important policy implications for leaders of global cities seeking to develop economically and environmentally sustainable cities. The promotion of sustainable and livable cities requires the sophisticated design and management of 2 green and transit-oriented policies that consider local context and market demand. A policy package that includes urban development and infrastructure provisions should be incorporated into a systemic approach. Specifically, the de-regulation of land use and the design of streets and public spaces to human scale are fundamental to creating compact and attractive urban settings. The findings in location choice models of creative industries strongly suggest that public policy should focus on expanding urban amenities and providing convenient public transit service to make cities more productive and competitive in the global economy. Regarding to conferred benefits from the urban greenway and BRT projects, policy makers should consider how to recapture some share of benefits from property owners to support public finances. This study demonstrates that urban greenway and bus rapid transit projects are an effective means of promoting dense land development and attracting creative industries, which make central cities more livable and competitive. _________________________________ Professor Robert Cervero Dissertation Committee Chair 3 Contents List of Figures …………………………………………………………………………..iii List of Tables ……………………………………………………………….……..……vii Acknowledgements ……………………………………………………………………..xi Chapter 1. Introduction…………………………………………...……….………..….1 Chapter 2. Theory and Empirical Literature……………………………..………..…3 2.1 The Paradigm Shift in Contemporary Cities….……………………………………...3 2.2 Dynamic Real Estate Market in the Green and Transit-Oriented City………………10 2.3 Firm Geography in the Rise of Urban Amenities and Public Transit…..…………...17 Chapter 3. Urban and T ransportation Policy in Seoul, Korea.…………….……….24 3.1 Seoul, Center of Korea……………..………………………………………………..24 3.2 Growth and Changes of Seoul ………………………….………..……………….....29 3.3 Urban Issues and Seoul’s Responses..…..…………………………………….…….34 3.4 Urban Greenway Project....…………..….…………………………………………..44 3.5 Bus Rapid Transit Project……………….…………………………………………..61 3.6 A Developer’s Perspective on the Urban Greenway and BRT Impacts…………….74 Chapter 4. Research Design………………………….………………………………..77 4.1 Research Questions and Hypotheses………………………………………………..77 4.2 Variable Descriptions and Data Source……………………………………………..78 4.3 Methodology…………………………….…………………………………………..85 4.4 Model Design………………………………………………………………………..91 4.5 Study Areas and Observations……..……………………………………………….96 i Chapter 5. Urban G reenway Models.……………….………………………………..98 5.1 Land-Use Change Models……………………………….………………………….98 5.2 Land Value Models…….…………..………………………………………………117 5.3 Location Choice Models of Creative Industries…..……………………………….133 5.4 Employment Density Models…………..…………………………………….….…153 Chapter 6. Bus Rapid T ransit Models.……………….………………………….…..163 6.1 Land-Use Change Models……………………………….…………………………163 6.2 Land Value Models…….…………..………………………………………………177 6.3 Location Choice Models of Creative Industries…..……………………………….194 6.4 Employment Density Models…………..…………………………………….…….214 Chapter 7. Conclusion and Further Research.……….………………….………….224 7.1 Summary of Key Findings..……..…………………….………………..………….224 7.2 Conclusion and Policy Implication..…………………….…………………………227 7.3 Further Research………………………..…………………………………….……230 References……………………………………………………………………………..234 Appendix 1: Description on Shape, Slope, and Road Accessibility Variables.……243 Appendix 2: Interview Questionnaire for Planners and Developers………………244 ii List of Figures Figure 2.1. Frameworks for Amenities, Human Capital, and Economic Growth.............19 Figure 3.1. Location of Seoul, Korea................................................................................25 Figure 3.2. Population Density Among Global Cities (2006) ..........................................25 Figure 3.3. Economic Status of Seoul, Korea (2005)........................................................27 Figure 3.4. Land Use Plan, Roads, and Subway Stations in Seoul...................................28 Figure 3.5. Location of South Seoul Development...........................................................31 Figure 3.6. Location of New Towns in Seoul Metropolitan Area.....................................33 Figure 3.7. Population of Seoul Metropolitan Area..........................................................35 Figure 3.8. Rush-Hour Traffic in Seoul.............................................................................38 Figure 3.9. Registered Motor Vehicles in Seoul (1995-2005)...........................................38 Figure 3.10. Speed of Motor Vehicles (1995-2005)..........................................................39 Figure 3.11. Mode Share in Seoul (2003-2006)................................................................39 Figure 3.12. Location of New Towns and Promotion Areas in Seoul, Korea...................42 Figure 3.13. Long-Term Green Network Plan in Seoul, Korea …………………………43 Figure 3.14. Location of Cheng Gye Cheon Corridor......................................................45 Figure 3.15. Transformation from