Financing rail-based mass transit through value capture in Chinese cities: a case in Shenzhen

Grant Data
Project Title
Financing rail-based mass transit through value capture in Chinese cities: a case in Shenzhen
Principal Investigator
Mr Li, Weifeng   (Principal investigator)
Start Date
Completion Date
Conference Title
Presentation Title
Rail transit, Housing value, Value capture, Integrated rail and property development, China
Urban Studies and Planning,Geography (Obsolete)
Block Grant Earmarked for Research (104)
HKU Project Code
Grant Type
Seed Fund for Basic Research
Funding Year
Under basic land rent theory (Alonso, 1964), households and firms are willing to pay more for locations with good access to public transit, all else equal, due to the reduced travel costs. Internationally, Capturing the land value increase attributable to mass transit has been increasingly considered a promising alternative to fund the transit system and relieve the heavy financial burdens of local governments and transit authorities around the world. Three successful examples in land value capture in East Asian, Hong Kong, Singapore, and Tokyo, also provide feasible solutions. In China, planners and policy-makers are expressing interest in coordinating transportation investment and land development in station areas. However, is it possible to finance a rail-based mass transit system through the capture of land-value increments in China where property tax is not yet implemented? It is believed that there are two prerequisites for the successful implantation of land value capture: (1) sufficient land value increments generated by the rail-based mass transit system and (2) proper institutional context that enables the local governments or transit authorities to capture this generated value. While progressive legislation may be on the books, the practical means of capturing site values for transit projects is hampered by inadequate land registration records and lagging assessments. This proposed research project aims to explore the potentials for and limitations to the use of value capture, vs. the integrated rail and property scheme (R+P) to finance rail-based urban transport infrastructure in Chinese cities. We will investigate the relationship between the accessibility advantages provided by the rail-based mass transit, and its capitalization into land price and residential property values in Shenzhen City within a hedonic price analysis framework with some spatial econometric techniques, based on some unofficial online data sources of vacant land transaction and housing asking price. We also plan to differentiate the role played by various types of subway stations by exploring the spatiotemporal characteristics of intra-urban trips based on the Metro Smartcard check-in and check-out Records. The modelling results will then be applied to the subway expansion project to predict the overall land-value increments contributed by subway systems under different value capture schemes, yielding estimates of the total capturable revenues that would support the debt financing of future development of rail-based transit systems in the absence of a significant property values database.