The Impact of Urban Transportation Investment on Property Values: Evidence from the Jakarta’s Mass Rapid Transit (MRT)

Urban transportation infrastructure remains underdeveloped in many low- and middle-income countries and quantitative evidence on its impact is limited. We examine the effect of the Jakarta Mass Rapid Transit (MRT), Indonesia’s first urban railway project, on property values. Using a panel dataset of rents for commercial offices and residential apartments along the MRT line, we apply a difference-in-differences estimation to assess the impact of the MRT opening in a quasi-natural experimental setting. We find a negative and significant impact of the MRT opening on commercial office rents in areas close to MRT stations, while no significant impact is observed on residential apartments. We argue that the negative impact on commercial offices may be driven by oversupply of rental office properties. Our results suggest that property values may not necessarily increase with urban transit development, posing a challenge for practitioners pursuing transit-oriented development (TOD) and land value capture (LVC) financing for infrastructure.