The present research work uses both a hedonic pricing model regression and difference-in-differences model regression to empirically investigate the impacts that the construction of rapid transit system stations have on property values.
It uses real estate transactions data from the Linkou area in Northern Taiwan where two stations of the recently built Taoyuan Airport MRT are located.
The hedonic pricing approach finds several significant internal characteristics of the properties that contribute to the determination of real estate prices. It also finds that a measurement of distance to the closes MRT station, an exogenous characteristic to the property, has a significant impact. A price decrease of 1,536 New Taiwanese Dollars for every meter further away from the station was the result found.
The difference-in-differences model found that after year 2014 those properties located within 1000 meters of the stations saw an average price increase of 709,223 New Taiwanese Dollars. This is during the construction phase of the MRT and 3 years before it commenced operations.
These findings can back important public policy implications such as the potential taxation of the land-value increase to support the financing of large infrastructure projects, a value capture strategy.

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