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A proposed light rail link from Hobart’s northern suburbs to the CBD could increase land values by up to 14 per cent, research suggests.
Research led by Curtin University's James McIntosh analyses the impact of passenger rail on local land value, using the metropolitan region as a model.
While funding for the $100 million rail project has not yet been confirmed, Mr McIntosh believes the region will benefit from the infrastructure project.
“The government’s talking about upzoning all the land through [the area] and making it a renewal corridor. Once they do that, they’ll get a huge value premium on not only the infrastructure, but also the increased development capacity,” Mr McIntosh told Smart Property Investment.
“If they can get the project over the line, the main benefits to the city are in the urban land development, and building closer to the city rather than producing more urban sprawl.”
The case study on more than 460,000 land parcels in rail catchment areas across Perth revealed that proximity to rail services increases land and property value.
The model calculates the added value within 400 metres, 800 metres and 1.6km of rail catchment areas by taking into account different components that make up land value, such as the size of blocks, dwelling density and distance to water.
Land parcels within 400 metres of rail services are optimal, adding a value premium of 14 per cent to the land, while new residential developments within 800 metres increase property values by up to 35 per cent.
Based on the analysis of Perth's Mandurah train line, Mr McIntosh explained the benefit is “monitised into land value” when construction has finished or when operations start.
However, Tony Collidge, co-principal of PRDnationwide Hobart believes the light rail would not make a significant impact on the property market in the area.
"We have a very adequate bus transportation system and all the amenities are close enough," he told Smart Property Investment.
"I don’t think we have the population demand and I would really question the future viability of the system." However, he does dismiss the possibility that the light rail may be a benefit in the future.
Land value refers to the value of a property, including the land and improvements that have been made, that is assessed by an appraiser to determine its price.