The effect of Tehran metro rail system on residential property values: A comparative analysis between high-income and low-income neighbourhoods

Estimating the effect of rail transit on residential property values has resulted in mixed findings. Some researchers report positive effects on property values while others are negative or insignificant. The current paper argues that the impact of rail transit on property values depends on contextual factors which can influence magnitude and direction of the impact and cause variation in the findings. Tehran's Metro Rail System is chosen because the neighbourhoods served by the metro to the north side and south side of the city are dramatically different in terms of economic, social and physical circumstances. A comparative analysis of six of Tehran's metro stations is conducted between the high-income neighbourhoods, which are located primarily on the city's north side, and lower-income neighbourhoods on the south side to determine the effects of proximity to metro stations on residential property values. The paper uses a mixed-method sequential explanatory design based on a before-and-after estimation strategy, which includes trend analysis, difference-in-differences model and qualitative impact assessment methods. The results show that there are large increases in premiums for residential properties near the lower-income neighbourhoods, the south side parts of the Tehran Metro Rail System, while a negative treatment effect for residential properties lying close to the northern stations in the high-income neighbourhoods. The qualitative survey also suggests that the impact of metro station is affected by a number of contextual factors, including the need for public transportation, land-use planning and management, socio-cultural effect and possible nuisance effects.