Estimating the impact of metro rail stations on residential property values: evidence from Tehran

Building a rail transit system into a neighbourhood generally raises expectations about the positive impact of the rail project on property values. Despite this general belief, the paper argues that the nature and magnitude of the effect vary depending on local and regional contextual factors. In this respect, the introduction of Tehran's Metro Rail System (TMRS) between the low-income/run-down neighbourhoods on the south side and high-quality/affluent neighbourhoods on the north side of the city provides a suitable opportunity to examine this issue. Thus, the paper focuses on Shariati and Qolhak Stations in the northern parts, and Shohada and Shemiran Stations in the southern parts of the city, comparing price trends before and after the opening of the stations. The effect is estimated for treated and control properties of the metro stations using both trend analysis and a difference-indifferences model. Moreover, in order to identify the mediating contextual factors that influence the magnitude and direction of the impact, a survey is conducted close to the selected metro stations by means of qualitative methods of impact assessment. The paper found an overall negative effect of the metro stations on the sales value of residential properties located in Tehran's affluent neighbourhoods. On the contrary, the effect is positive and high for properties located close to the southern stations in the poor and run-down neighbourhoods of the city. The qualitative survey indicates that this negative effect in the northern neighbourhoods may be due to such contextual factors as a lack of considerable demand for public transport, inappropriate land-use management, perceptions of crime and privacy, and nuisance effects.