Property value capture for development of mass rapid transit: Case study from Hanoi

Property value capture is expected to financially support investments in mass rapid transit (MRT) in many developing countries where conventional public funding is insufficient to meet the local demand. This study presents a case study to examine the financial feasibility of developing and operating a new metro line through property value capture and land-use control in Hanoi. First, property prices are estimated with local data for both residential and office properties, using hedonic price models. Next, a travel demand model, including trip generation and attraction, trip distribution, and travel mode choice sub-models, is estimated with person trip survey data, following a conventional four-step model framework. Subsequently, multiple scenarios are built for a hypothetical investment in an MRT line in Hanoi. The scenarios are assumed considering socio-demographics and transportation infrastructure in the context of new taxation levied on local properties near MRT stations and land-use controls with respect to population and employment to increase their densities near MRT stations. The estimated models are applied to each scenario to estimate the expected financial viability of MRT development and operation. The results reveal that the property value capture and land-use control could significantly improve the operator's profitability.