ESTIMATING THE IMPACT OF MASS RAPID TRANSIT (MRT) ON RESIDENTIAL PROPERTY

ESTIMATING THE IMPACT OF MASS RAPID TRANSIT (MRT) ON RESIDENTIAL PROPERTY PRICES IN GREATER KUALA LUMPUR, MALAYSIA

 

Mohd Faris Dziauddin1 (Project Leader), Mohmadisa Hashim2, Zafirah Al Sadat Zyed3, Hanifah Mahat4

1,2,4Department of Geography & Environment, Faculty of Human Sciences,

Universiti Pendidikan Sultan Idris (UPSI),

35900 Tanjong Malim, Perak Darul Ridzuan

3Department of Real Estate, Faculty of Built Environment,

Universiti Malaya (UM),

50603 Kuala Lumpur, W.P. Kuala Lumpur

ABSTRACT

Urban rail transit systems such as Mass Rapid Transit (MRT) and light rail transit (LRT) can generate both positive and negative externalities, especially for those located extremely close to these facilities. Using the Sungai Buloh–Kajang (SBK) MRT Line in Greater Kuala Lumpur, Malaysia as a case study, this research investigates the impact of MRT on residential property prices by considering the positive and negative externalities that can be generated by such a system. To estimate the impact of the SBK MRT Line on residential property prices, a hedonic pricing model was employed. The study utilises a data set of residential sales for a seven–year period (2013–2019), located within a 2–km radius along the stretch of the SBK MRT Line. The results presented in this study suggest that after controlling for property markets with similar locational characteristics, income groups and housing type: (1) A typical condominium/service residence unit located within 0.4 km (the treatment zone) from the nearest MRT station and transacted after the system was operational on the northwest side of the city (Segment C area) could earn a premium of approximately 9.5%, or RM99,874 of the city’s mean home price, while a typical similar property located within the same distance from the nearest MRT station but transacted before (during construction, to be precise) the system was operational could generate a premium of about 6%, or RM63,078 of the city’s mean home price, compared to those outside of this distance; (2) A terrace property located within 0.85 km from the nearest MRT station and transacted after the system was operational experienced a statistically significant increase in price of 7.4%, which, at the mean, equates to RM81,325. Although this finding might be good news for some property owners, properties located within 0.08 km along the MRT track in affluent neighbourhoods on the northwest side of the city (Segment C area) were about 16.6% (RM182,432 of the mean) cheaper than those located outside this distance; and (3) A terrace property located within 0.8 km and 1.4–2 km from the nearest MRT station was valued positively by homebuyers from the middle– and lower–middle–income groups on the southeast side of the city (Segment F area). Evidently, the results show that property prices increased by about 8.8% (RM45,475 of the mean price) and 6.0% (RM31,005 of the mean price) for those located within 0.8 km and 1.4–2 km from the nearest MRT station, respectively. Based on the above discussion, it can be concluded that the introduction of the MRT system does indeed have both positive and negative externalities on nearby residential property prices. However, it is important to note that the positive impact on residential property prices is broader in scope, affecting more housing estates, while the negative impact is confined to a much more limited area. Moving beyond the statistical results, the findings of this study have two important implications for the planning and policy-making communities; namely, the powerful need for potential implementation of land value capture and strategic transitoriented development planning.

Keywords: Mass Rapid Transit (MRT), residential property prices, hedonic pricing model (HPM), land value capture, Greater Kuala Lumpur