Understanding Subway Vibrancy in Live-Work-Play: A Case Study from and for Santiago, Chile

Abstract

I characterize the subway neighborhood’s activity in three essential categories: live, work, and play. My research examines how Metro de Santiago’s latest expansion – Line 6 – has affected the configuration of neighborhoods across the city. Using multiyear information on subway new developments, data on amenities and jobs distributed in Santiago, real estate transactions in the city, and transit data in GTFS format, the results from the Differences-in-Difference model show that new subway infrastructure positively contributes to the number of openings of new amenities – be it in a subway neighborhood or in other neighborhood that benefits from network effects. The results show that the opening of line 6 in Santiago has led to an annual increase of 14.85 amenities in treated cells when considering improvements in accessibility to population. The analysis also shows that replacing accessibility to population by accessibility to purchasing power better captures the market effect on the increase in vibrancy. In models that incorporate this variable, the results suggest that the opening of line 6 has led to an average annual increase of 31.31 amenities in treated cells.

I also show that both improved accessibility and the endogenous growth of consumer amenities capitalize into home values following the opening of new stations. The empirical results demonstrate that for every 1% increase in accessibility to population, housing prices increase by about 0.005%; which suggest that most of the changes caused by increased accessibility are absorbed strongly by the initial increase in the number of amenities (indirect effect) and less by the consequential home value appreciation (direct effect).

My research’s second contribution is to provide evidence on the relevance of land use regulations in enhancing the effects of vibrancy stimulated by transit infrastructure. The results show that amenities in new and existing subway neighborhoods in Santiago increased by 403% after the opening of line 6 in cells that allow commercial building or allocate land specifically for commercial purposes. This increase in the number of amenities indirectly contributes to housing price premium by improving the attractiveness of a neighborhood, however, I also find evidence that housing prices are directly affected by changes in accessibility. The results suggest that in cells where commercial building is allowed housing prices increase by 9.86% after the opening of new subway stations and that commercial land use also contributes indirectly to housing appreciation by 40%.