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The Impact of Bus Rapid Transit System on Land Prices in Mexico City

Durfari Janive Velandia Naranjo

July 2013, English

This paper estimates the effect of the Bus Rapid Transit (BRT) system of Mexico City on residential land prices in the formal real estate market. Specifically, we estimate the effects of Line 1 (on Insurgentes Ave.) and Line 2 (on Axis 4 South) of the Metrobus, which is the name of the BRT in the Mexico City. A quasi-experimental approach is used, with the roadways mentioned as the treatment group and a control group compring the southern section of Insurgentes Avenue (where the Metrobus was not initiallty built) and Axis 6 South (which is a road that runs parallel to Line 2). The strategy used to ensure that the treatment group can be compared with the control group, and to isolate possible effects of ongoing infrastructure works, was to estimate the effects by area on different sections of the BRT. The main findings are that the north and south end segments of Insurgentes Avenue are comparable and allow for an unbiased estimation. Line 1 produced an increase of approximately 15 percent in land prices, while the estimates for Line 2 showed no evidence that land prices were affected by the BRT infrastructure investment. This last result may be associated with the time period used for the assessment of effect, which is the entire construction period plus 5 months after the service was inaugurated. Possibly this is a too short a period to measure impact.

Keywords: BRT, land prices, urban transit, Mexico City public transportation, infrastructure investment impact on land prices.