A methodological proposal to estimate changes of residential property value: case study developed in Bogotá

Abstract

This article is an empirical study of residential land values in the vicinity of the TransMilenio system (Bus Rapid Transit, BRT) in Bogotá (Colombia). The results have been established through impact evaluation by means of nonparameteric approaches (Propensity Score Matching, PSM) and econometric approaches (Spatial Hedonic Price, SHP) indicating that access to the BRT system generates benefits on the change of property value.

Keywords:

• TransMilenio
• Bogotá
• impact evaluation
• propensity score matching
• spatial hedonic price
• change of property value

JEL Classification:

• C14
• C25
• C52
• L92
• R11

Notes

¹Economic development, land-use strategy, improving accessibility, saving travel time, land-value increases, traffic accident decreases, reductions in crime rates and air pollution (Lleras, 2003; Sandoval and Hidalgo, 2003; Moreno, 2004; Mendieta and Perdomo, 2007; Perdomo et al., 2007; Rodríguez and Mojica, 2008).

² The subscript i is to describe the cross-sectional observations, as property 1 up to 227 (i = 1, 2, . . . , 304). Also, the subscript k is to describe total property attributes (z ₁, . . . , z _k ) or explanatory variables.

³To ensure the existence of a common support for the group of properties compared, the sample contains properties that would have the same probability of having access to TransMilenio system but not account with it. Thus, their spatial distribution is near to major avenue where is possible construct the BRT project and because socio-economic aspects are similar in both zones of the study.

⁴XY-coordinates of the residential properties.

⁵In Geoda (spatial econometrics) and Stata 9 (Box–Cox form and PSM), through robust SEs and generalized least square methods to remove heteroscedasticity.

⁶Omitted spatial lags, because they were insignificant at the 10% level.

⁷Less than 500 m.