The capitalization and urbanization effect of subway stations: A network centrality perspective

This study assesses the economic effects of subway investments in China by focusing on the network centrality of subway stations, an important factor that has been overlooked in the literature on station proximity. We estimate the annual network centrality of 3,540 subway stations in China using the social network analysis method, and analyze the effect of this centrality on surrounding land prices, land allocations, and land revenues from 2007 to 2019 using a large land dataset and multiple regression methods. Our findings indicate that the expansion of subway networks generates significant economic benefits. Specifically, higher network centrality of subway stations has a positive capitalization effect on land prices, facilitates government land allocation, and leads to increased land revenues, which can be used for future subway investments. This suggests a novel and sustainable subway investment model based on constructing subways to nurture land value, and selling land to fund subway construction. Moreover, we find that the effects of network centrality vary depending on land use, proximity to the station, urban land availability, and subway traffic volume. Based on these results, we discuss the implications of this model and the boundary conditions of its application to other regions and countries to finance their rail transit investments, as well as the challenges to sustaining this model in China.