# RECORD 3777ce734c4a5c9380dfa227ede8503f4f25b44e
# TITLE: The impact of urban light rail transit on double-story terraced property values in the Greater Kuala Lumpur, Malaysia
# YEAR: 2021.0  VENUE: nan  DOI: 10.22146/ijg.46302
# AUTHORS: M. Dziauddin
# PAGES: 6  CANDIDATE TABLE PAGES (1-based): [3]
# ABSTRACT: Introducing a rail transit system into an urban region is expected to increase land values, and subsequently, residential property values. Despite this general belief, there has been limited research on the impact of proximity to urban light rail transit stations in developing countries setting. This study, therefore, investigates the impact of proximity to urban light rail transit on double-story terraced property values in the Greater Kuala Lumpur, Malaysia, using hedonic pricing model. The findings suggest urban light rail transit has a positive and significant impact on surrounding double-story terraced residential property values – estimated at a premium of 12.3% and 9.8% for properties located up to 1000 m and 1001 – 2000 m to the nearest light rail transit station respectively. The findings of the study are useful for investors and developers, namely to build more houses near urban rail transit infrastructure since they lead to significant appreciation in value.


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e impact of urban light rail transit on double-story terraced property 
values in the Greater Kuala Lumpur, Malaysia 
 
Mohd Faris Dziauddin  
Department of Geography, Faculty of Human Sciences, Universiti Pendidikan Sultan Idris, Malaysia 
Abstract. It is generally believed that a rail transit system plays a pivotal role in increasing land values, and 
subsequently, residential property values. Despite this general belief, there is considerably little empirical 
research on the impact of urban light rail transit systems on residential property values in developing 
countries setting. is study, therefore, investigates the impact of proximity to urban light rail transit on 
double-story terraced property values in the Greater Kuala Lumpur, Malaysia, using hedonic pricing model. 
e ĕndings suggest there is a statistically positive and signiĕcant impact of urban rail transit on 
surrounding double-story terraced residential property values – estimated at a premium of 12.3% and 9.8% 
for properties located up to 1000 m and 1001 – 2000 m to the nearest light rail transit station respectively. 
e ĕndings of the study are useful for investors and developers, namely to build more houses near urban 
rail transit infrastructure since they lead to signiĕcant appreciation in value. 
1. Introduction  
Introducing urban light rail transit is expected to increase 
residential property values that are located within a short 
distance to the nearest station. is is due to the fact that 
residential properties that are located within a short distance 
to the nearest station enjoy easy access to work and 
amenities, 
greater 
mobility 
options 
and 
reduced 
transportation costs (Forouhar, 2016). Hence, in most cases, 
greater access to the nearest urban light rail transit stations is 
valued positively by property buyers and as a result, 
residential property values are signiĕcantly higher. Over the 
past 50 years or so, there have been numerous studies 
conducted to establish a positive relationship between urban 
light rail transit and residential property values. But, a limited 
of them have been conducted in the developing countries. 
Hence, the main objective of this study is to investigate the 
impact of proximity to urban light rail transit on double-
story terraced property values in Greater Kuala Lumpur, 
Malaysia, using hedonic pricing model. Since the common 
way to ĕnance public transport infrastructure is from the 
government (federal or local governments), either through 
tax revenues or borrowing, established the positive 
relationship between urban light rail transit and residential 
property values should certainly be considered as a 
mechanism to inĘuence the public decision and rationalize 
public investment in public transport infrastructure.        
From a theoretical point of view, the bid-rent theory 
established by Alonso (1964) and Muth (1969) provides 
better equipment to understand the relationship between 
urban light rail transit and residential property values. e 
bid-rent theory suggests that improvement in the transport 
system that increases accessibility to work, shopping and 
recreational sites which reduces transport costs is reĘected in 
higher land value along the corridor rather (particularly 
around stations) than land outside the corridor. As a result, 
we should expect a higher bid-rent surface at transit stations.  
One of the earliest studies to establish the positive 
relationship between urban rail transit and residential 
property values was carried in Philadelphia, New Jersey by 
Boyce, Allen, Mudge, Slater, & Isserman (1972). e results 
indicate that statistically signiĕcant positive impact of urban 
rail transit on property values in which for every minute of 
savings to the city centre, the residential property values 
increased by USD$149 to $200. Since then, a numerous 
studies have been carried out in many cities to establish a 
positive relationship between urban rail transit and 
residential property values: Amsterdam, Rotterdam, and 
Enschede (Debrezion, Pels, & Rietveld, 2011), Beijing (Feng, 
Li, and Zhao, 2011; Gu & Guo, 2008), Charlotte (Yan, 
Delmelle, & Duncan, 2012), Dublin (Mayor, Lyons, Duffy, & 
Tol, 2012), Ottawa (Hewitt & Hewitt, 2012), Houston (Pan, 
2019), Montreal (Dubé, ériault, & Des Rosiers, 2013), 
Phoenix (Golub, Guhathakurta, & Sollapuram, 2012), 
Greater Kuala Lumpur (Dziauddin, Alvanides, & Powe, 
2013), Minnesota (Cao & Lou, 2017), Tehran (Forouhar, 
2016), and Warsaw (Trojanek & Gluszak, 2017). 
In the North America, Yan et al. (2012) discover 
residential properties located within 402 metres and 1,609 
metres from Charlotte’s light rail transit stations increased in 
value. In Ottawa, Hewitt and Hewitt (2012) report the O-
Train stations has a statistically signiĕcant impact on the 
 ISSN 2354-9114 (online), ISSN 0024-9521 (print) 
Indonesian Journal of Geography Vol.53 , No. 1, 2021 (61 – 66) 
DOI: http://dx.doi.org/10.22146/ijg.46302 website: https://jurnal.ugm.ac.id/ijg 
©2021 Faculty of Geography UGM and e Indonesian Geographers Association 
Received: 2019-07-07 
Accepted: 2021-03-10 
  
 
 
  
Keywords:  
Urban area;  
urban light rail transit;  
residential property values; 
hedonic pricing model;  
Greater Kuala Lumpur. 
 
 
Correspondent email: 
faris@fsk.upsi.edu.my  
RESEARCH ARTICLE 
©2021  by the authors. Licensee Indonesian Journal of Geography, Indonesia.  
is article is an open access  article distributed under the terms and conditions of the Creative Commons  
Attribution(CC BY NC) licensehttps://creativecommons.org/licenses/by-nc/4.0/. 


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63 
 
Indonesian Journal of Geography, Vol. 53, No.1, 2021 : 61 – 66 
Two dichotomous urban rail transit variables are included in 
the ĕnal regression model and are the focus of this study: (1) 
residential properties located up to 1000 m to the nearest 
LRT station (DISTLRT1), and (2) residential properties 
located within 1001 – 2000 m to the nearest LRT station 
(DISTLRT2). 
Other 
locational 
characteristics 
include 
proximity to city centre (CBD), 
hospital (HOSP), 
recreational park (PARK), primary school (PRIMARYSCH), 
high-performing 
secondary 
school 
(HP_SECONDARYSCH), forest (FOREST), industrial area 
(INDUSTRIAL), the Central Side (CENTRAL) and the South 
Side (SOUTH) of Kuala Lumpur. 
Table 1 shows the summary statistics of dependent and 
exploratory variables used to estimate the impact of urban 
light rail transit on residential property values in this study. 
Based on a sample of about 1,640, following observation can 
be made: (1) property sales values range from MYR 100,000 
(USD 31,152, with the FOREX rate at MYR 3.21 or USD 1.00 
in 2010) to nearly MYR 3 million (USD 934,579); (2) the 
average property sales value is MYR 463,907 (USD 144,519); 
(3) the average property has a Ęoor size of around 139 square 
metre or 1,500 square feet; and (4) there are units with as 
low as 55 square metre or 592 square feet to as large as 372 
square metre or 4,000 square feet. 
In regression analysis, it is common to expect the 
presence of multicollinearity between the exploratory 
variables. Since the exploratory variables may be highly 
correlated, Pearson’s correlation coefficient and variance 
inĘation factors (VIFs) of each exploratory variable are 
employed in this study.  According to Orford (1999) and 
Neter et al. (1985), a Pearson’s correlation coefficient value 
of 0.8 and above and a variance inĘation factor value of 10 
and above is generally considered harmful collinearity. In 
this study, pairs of exploratory variables that produce a 
correlation coefficient value of 0.8 or higher and variance 
inĘation factor value of 10 or higher are removed from the 
ĕnal model. Another major concern with regression analysis 
is the existence of heteroscedasticity. e existence of 
heteroscedasticity in the ĕnal data set is tested by using the 
Park test and its results suggest there is no heteroscedasticity 
in the error variance. 
To capture the impact of urban rail transit on double-
story terraced residential property values, several different 
functional forms were explored. e ĕnal form of hedonic 
pricing model equation takes the following form: 
 
lnYi = β0 + β1DISTLRT1i + β2DISTLRT2i + β3FLOORAREAi + 
β4LOTRAREAi + β5BEDROOMSi + β6FREEHOLDi + 
β7SHOPCENTREi 
+ 
β8HOSPITALi 
+ 
β9PARKi 
+ 
β10PRIMARYSCHi 
+ 
β11HP_SECONDARYSCHi 
+ 
β12FORESTi + β13CBDi + β14INDUSTRIALi + β15CENTRALi + 
β16SOUTHi + εi          
       (2) 
 
where lnYi is natural logarithm of the sale price of a property 
in Ringgit; DISTLRT1 is a dichotomous variable for 
residential properties located within 1000 m to the nearest 
LRT station; DISTLRT2 is a dichotomous variable for 
residential properties located within 1001 – 2000 m to the 
nearest LRT station; FLOORAREA is the Ęoor area of 
property in square feet; LOTAREA is the land area of 
property in square feet; BEDROOMS is a dichotomous 
variable for property with four or more bedrooms; 
FREEHOLD is a dichotomous variable for property with 
freehold holding status. SHOPCENTRE, HOSPITAL, PARK, 
PRIMARYSCH, HP_SECONDARYSCH, CBD, FOREST and 
INDUSTRIAL are respective proximity to the nearest shopping 
centre, hospital, recreational park, primary school, high 
performance secondary school, central business district, 
forest and industrial area which are all measured in metre. 
Finally, CENTRAL and SOUTH are dichotomous variables 
associated with the properties located in the central and 
southern sides of Greater Kuala Lumpur, respectively. β are 
parameters to be estimated, and ε is the normally distributed 
error term. 
In the 
semi-log functional form, 
the 
interpretation of the estimated coefficients β associates to 
their proportional (multiplied by 100).   
  
Units 
Mean 
S.D. 
PRICE 
Ln Price (dependent variable) 
MYR 
MYR 
463,906.61 
12.91 
280,676.81 
0.52 
DISTLRT1 
DISTLRT2 
Dichotomous variable (0 or 1) 
Dichotomous variable (0 or 1) 
0.20 
0.38 
0.40 
0.49 
FLOOSIZE 
LOTSIZE 
BEDS 
FREEHOLD 
Square feet 
Square feet 
Dichotomous variable (0 or 1) 
Dichotomous variable (0 or 1) 
1,549.74 
1,692.62 
0.39 
0.67 
407.69 
755.76 
0.49 
0.47 
SHOPCENTRE 
HOSP 
PARK 
PRIMARYSCH 
HP_SECONDARYSCH 
CBD 
FOREST 
INDUSTRIAL 
CENTRAL 
SOUTH 
Metre 
Metre 
Metre 
Metre 
Metre 
Metre 
Metre 
Metre 
Dichotomous variable (0 or 1) 
Dichotomous variable (0 or 1) 
1,596.29 
4,411.42 
2,532.41 
1,049.57 
3,876.53 
8,509.49 
1,919.91 
3,749.00 
0.30 
0.21 
1,003.98 
1,927.68 
1,230.34 
1,053.64 
2,050.43 
2,633.02 
1,144.00 
2,272.79 
0.46 
0.41 
Table 1. Descriptive statistics of dependent and independent variables 


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64 
 
3. Results and Discussion  
e results of the estimation of Equation (2) are 
presented in Table 2. e model ĕts the cross-sectional data 
well and explains 62% of the variation in double-story 
terraced residential property values. All independent 
variables that inĘuence double-story terraced residential 
property values are signiĕcant at the 0.05 level and have the 
expected positive or negative signs. e estimated coefficients 
reveal that light rail transit has a positive and signiĕcant 
impact on surrounding double-story terraced residential 
property values – estimated at a premium of 12.3% and 9.8% 
for properties located up to 1000 m (DISTLRT1), and 1001 – 
2000 m (DISTLRT2) to the nearest light rail transit station 
respectively. e results support the Alonso-Muth-Mills-
based hypothesis that residential properties around urban rail 
transit stations capitalise in value due to potential savings in 
transports costs. e impact of other structural and locational 
attributes variables is also estimated. e results show for 
every square foot increase in the Ęoor size (FLOORSIZE) and 
lot size (LOTAREA), the double-story terraced residential 
property values are estimated at a premium of 0.04% and 
0.02% respectively. As expected, the effect of number of 
bedrooms (BEDROOMS) on residential property values is 
also positive – double-story terraced residential property 
units with four or more bedrooms are to sell at a premium of 
4.2%. Residential property units with a freehold ownership 
rights (FREEHOLD) sell at a premium of 18.8%. 
In terms of locational attribute variables, the estimated 
coefficients suggest that double-story terraced residential 
property values  increase if properties are located in close 
proximity to the nearest shopping centre (SHOPCENTRE), 
proximity to the nearest recreational park (PARK), proximity 
to 
the 
nearest 
high-performance 
secondary 
school 
(HP_SECONDARYSCH), and proximity to the nearest forest 
(FOREST) – estimated at a premium of 0.008%, 0.003%, 
0.007% and 0.003% for every metre closer to these locational 
attributes respectively. e estimated coefficient further 
denotes the proximity to the city centre (CBD) negatively 
impacts residential property values – residential property 
units decrease in value by about 0.002% for every metre away 
from the city centre, which conĕrms the monocentric urban 
structure theory for Greater Kuala Lumpur. Results from 
estimation also suggest residential property units located at 
the Central Side (CENTRAL) and the South Side (SOUTH) 
of Kuala Lumpur which have the largest share of middle-
income, 
upper 
middle-income 
and 
upper-income 
households, command a premium of 30.3% and 20.1% 
respectively over similar double-story terraced residential 
properties located in other parts of the Greater Kuala 
Lumpur.  
e results also indicate that, for every metre closer to the 
nearest 
hospital 
(HOSPITAL), 
primary 
school 
(PRIMARYSCH), and industrial area (INDUSTRIAL), the 
double-story terraced residential property values are sell at 
discount of 0.01%, 0.007%, and 0.003% respectively. 
Overall, this study contributes to the growing literature 
on the impact of urban light rail transit on residential 
property values in three ways, (1) it investigates the impact of 
urban light rail transit on double-story terraced residential 
property values in the developing country, i.e., Malaysia; (2) 
the impact of the Greater Kuala Lumpur’s urban light rail is 
investigated by utilising the 2009 and 2010 residential 
property database, which allows the effects to be captured 
aer a reasonable time span, i.e., 12 years aer the opening of 
the ĕrst urban light rail transit in the country; and (3) the 
impact of the Greater Kuala Lumpur’s urban light rail is 
measured by employing two distance intervals namely up to 
1000 m and 1001 – 2000 m of the nearest LRT station.   
Regarding (2), Gu and Guo (2008) found that the impact 
of Beijing subway line 13 on suburban residential property 
values two years aer the opening was no longer signiĕcant. 
Another study by He and Jing (2013) on Beijing subway line 
4 found that the impact lasted for four years. In addition, 
Dziauddin et al. (2013) study the Kelana Jaya LRT line in the 
Klang Valley, Malaysia based on the data in 2004 which is six 
years aer the opening suggested that the impact was 
marginal. e ĕnding of present study, however, suggest that 
double-story terraced residential property values appreciated 
largely 12 years aer the opening. is ĕnding reĘects the 
longer time that property buyers place to the availability of 
urban light rail transit in the area. In car loving country such 
as Malaysia it is not surprised to expect property buyers take 
longer time to respond positively towards the existence of 
urban light rail transit especially when Malaysian have 
witnessed the hikes in fuel and parking rates (particularly in 
the Kuala Lumpur city centre). As a study conducted by Chiu 
Chuen, Karim, and Yusoff (2014) in Greater Kuala Lumpur 
denotes that factors such as parking costs, fuel prices and car 
prices may considerably inĘuence the likelihood of 
commuters using a car as their main mode of transport.       
Regarding (3), the largest positive impact tends to occur 
within 1000 m of the nearest LRT station. is ĕnding is 
consistent with previous studies (Dubé et al., 2013; Dziauddin 
et al., 2013; Feng et al., 2011) suggesting that residential 
property values that are close to stations are higher than those 
located further away. For example, studies carried out by 
Dubé et al. (2013) in Montreal, Canada, and Feng et al. (2011) 
in Beijing, China found that the positive impact of rail transit 
on residential property values diminished with an increase of 
distance from the station.       
 
4. Conclusion  
is study uses a hedonic pricing model to investigate the 
impact of proximity to light rail transit on residential 
property values based on a sample of double-story terraced 
properties in the Greater Kuala Lumpur, Malaysia. e 
results show that light rail transit has a signiĕcant positive 
impact on proximate double-story terraced property values 
up to a 1000 m and 1001 – 2000 m radius to the nearest light 
rail transit station. e ĕt of the equation is found to be 
satisfactory as an adjusted R2 higher than 60% for cross-
sectional data. e impact is the highest when double-story 
terraced properties are located up to a 1000 m radius to the 
nearest light rail station. It can be concluded that urban light 
rail transit plays a signiĕcant role in determining residential 
property values. e results of this study can provide some 
new insights for investors and developers to fully consider of 
building more houses near urban rail transit infrastructure 
since there is a signiĕcant value appreciation. e results of 
this study may also help home buyers select reasonably 
locations when buying a new house so that it will ensure the 
investment appreciates in value over time. 
While the results are robust in investigating the impact of 
urban light rail transit on residential property values, a 
limitation of this study lies it its modelling approach and 
temporal effects. e main disadvantage of OLS is that it has 
THE IMPACT OF URBAN LIGHT RAIL  
Mohd Faris Dziauddin