TTC expansionRSM 2128: Real Estate Economics   Arun Lamba, Jason Short, Pramod Jindal             December 12, 2012
Agenda1.   Executive Summary2.   Theoretical Background3.   TTC expansion4.   Evidence5.   Conclusion12/12/2012           ...
Executive SummaryQuestion• How will the TTC expansion project affect Real Estate Prices in the area?Conclusion• Real Estat...
Theoretical Background• Real Estate asset prices are based on Discounted Future Cash  Flows• Real Estate is unique because...
TTC – Spadina Expansion12/12/2012                             4
Impact of public transit on subject area    Empirical evidences suggest that public transits do impact real estate prices ...
Impact of public transit on subject area                    • Type of real estate (Residential vs. Commercial)            ...
Impact on the substitute area       Empirical evidences suggest that public transits expansion lead to                    ...
Impact on Population Density    TTC’s expansion to Sheppard West would decrease the population density in           Downto...
Impact on Population Density    TTC’s expansion to Sheppard West would decrease the population density in           Downto...
Impact on Rent Gradient   TTC’s expansion to Sheppard West would flatten the rent gradient from                   Downtown...
Conclusion• Prices will be positively affected by the TTC expansion project• Population density in substitute areas will d...
Q&A             Thank You12/12/2012               14
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Effect of public transit expansion on Real Estate Prices

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Effect of public transit expansion on Real Estate Prices

  1. 1. TTC expansionRSM 2128: Real Estate Economics Arun Lamba, Jason Short, Pramod Jindal December 12, 2012
  2. 2. Agenda1. Executive Summary2. Theoretical Background3. TTC expansion4. Evidence5. Conclusion12/12/2012 1
  3. 3. Executive SummaryQuestion• How will the TTC expansion project affect Real Estate Prices in the area?Conclusion• Real Estate prices will be positively affectedMajor Insights• Price appreciation occurs within a specific boundary relative to access points• These boundaries are different depending on use• Peak price increases typically occur three years after completion12/12/2012 2
  4. 4. Theoretical Background• Real Estate asset prices are based on Discounted Future Cash Flows• Real Estate is unique because of its convertible end use• Location is important in Real Estate12/12/2012 3
  5. 5. TTC – Spadina Expansion12/12/2012 4
  6. 6. Impact of public transit on subject area Empirical evidences suggest that public transits do impact real estate prices substantially, however, the impact varies.1• Income level of neighbourhood o In low income neighborhoods, property values increase o In high income neighborhoods, property values decrease• Proximity o Impact on property prices not seen beyond quarter or third of mile o Perceived distance from station valued more than actual distance from station12/12/2012 7
  7. 7. Impact of public transit on subject area • Type of real estate (Residential vs. Commercial) 0% Distance from TTC Station (Feet) Commercial Property 0 200 400 600 800 1000 12% -1% 10% Changes in PricesChanges in Prices -2% 8% 6% -3% 4% -4% 2% -5% 0% 0 100 200 300 400 500 600 700 -6% Residential Property Distance from TTC Station (Feet) 12/12/2012 8
  8. 8. Impact on the substitute area Empirical evidences suggest that public transits expansion lead to suburbanization2 Population Growth (1950-1990) Whole Metropolitan 72% City Center -17%• This was partly attributed to the innovations in urban transportation infrastructure, particularly the construction of new highways12/12/2012 9
  9. 9. Impact on Population Density TTC’s expansion to Sheppard West would decrease the population density in Downtown Toronto and increase the density in Sheppard West Change in population by 2017 Downtown Toronto Sheppard West Without TTC Expansion With TTC Expansion12/12/2012 11
  10. 10. Impact on Population Density TTC’s expansion to Sheppard West would decrease the population density in Downtown Toronto and increase the density in Sheppard West Change in population by 2017 Downtown Toronto Sheppard West Without TTC Expansion With TTC Expansion12/12/2012 12
  11. 11. Impact on Rent Gradient TTC’s expansion to Sheppard West would flatten the rent gradient from Downtown Toronto to Sheppard West Rent gradient Sheppard West Downtown Toronto Without TTC Expansion With TTC Expansion12/12/2012 10
  12. 12. Conclusion• Prices will be positively affected by the TTC expansion project• Population density in substitute areas will decrease whereas population density in Sheppard West will increase• Rental gradient between Sheppard West and downtown Toronto will flatten• Price appreciation will take up to three years12/12/2012 13
  13. 13. Q&A Thank You12/12/2012 14

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