The real estate market and public transportation systems in developing countries: the case of Medellin, Colombia

The objective of this study was to measure the effect of the distance between homes and the stations of the integrated public transportation system in Medellin on home prices. The hedonic models used here were calculated using ordinary least squares (OLS) and two spatial econometric models: the spatial autoregressive (SAR) model and the spatial error model (SEM). The results obtained indicate that the stations of this transportation system have an impact on home prices depending on the income level of the district where they are located. On the one hand, the price of a home in a low-or middle-income district can increase (17.1% or 15%) if it is "near" a station (1.5-2.0 km and 1.0-1.5 km, respectively), but it is not affected if the housing unit is "too close" (up to 1.0 km). On the other hand, if the housing unit is located in a high-income district, the nearer it is to a station, the lower its price (-15% between 0 and 1.0 km, and-12% between 0.5 and 1.0 km). These results are relevant for all the agents involved in real estate and public policy makers interested in executing transportation infrastructure projects in cities in developing countries.