Property value trends are significantly shaped by commuters, who are considered the backbone of urban economies.
It comes as no surprise to anyone that houses located closer to train stations cost more. The convenience is unbeatable and daily commutes become less stressful, commuter etiquette aside. There exists a higher number of stations situated within the city centre especially and because a lot of business and economic activity occurs in the city centre area, houses close to it are likely to command high prices as well.
Conversely, the price of homes is lower the further they are from the city centre. To no surprise again though, the price and rental value of homes in the area will increase when there is good access to a transportation system, like rail. It has long been said that no matter how far a home is from the city centre, its price will be high if there is a train station nearby.
The relationship between transportation infrastructure and property value is a subject of interest for urban economists and real estate investors alike. Property value trends are significantly shaped by commuters, who are considered the backbone of urban economies. As a result of their daily movement between residential and commercial areas, supply, demand and ultimately real estate prices are all impacted.
Golden tickets
Research conducted by the National Property Information Centre (Napic) further emphasises that property appreciation rates are directly correlated with proximity to public transportation hubs. Real estate has continuously performed better than the market average when it comes to properties situated within a 1km radius around MRT or LRT stations.
Another study by Universiti Kebangsaan Malaysia (UKM) actually found that property values within a 500m radius of LRT stations in the Klang Valley appreciated significantly faster than those situated further away. This trend is underpinned by the convenience and time savings afforded to residents who can easily access public transport.
The public transport networks in Malaysia have expanded at a rapid pace, especially in major cities like Kuala Lumpur and Penang, as the country's urban landscape continues to flourish. Properties are now more desirable based largely on the effectiveness and accessibility of public transportation systems.
According to the United Nations Department of Economic and Social Affairs, 68% of the world’s population will be urban by 2050. This will add almost 2.5 billion individuals to the existing metropolitan population. As a result, cities all over the world have spent significant figures investing in transportation infrastructure to meet the rising demands.
The daily grind
Apart from the use of public transportation, general accessibility and interconnectivity play a significant role in property value. Commuters tend to favour well-connected areas with efficient traffic flow and convenient access to major highways and expressways.
According to a Knight Frank Malaysia report, there has been significant price growth for properties located near major transportation corridors like the North-South Expressway (NSE) and the New Klang Valley Expressway (NKVE). One of the main factors driving demand in these areas and resulting in premium pricing is the ease of commuting to and from work.
Property values are also influenced by the lifestyle choices and income levels of commuters. Due to their greater purchasing power, areas with a high concentration of middle-class to upper-class residents typically have higher property prices. On the other hand, more affordably-priced real estate is typically available in communities where commuters are primarily from lower-class backgrounds.
Additionally, the desirability of a property is influenced by the amenities and facilities that are accessible by car. Convenient access to shopping malls, schools, hospitals and recreational areas is a top priority for commuters. These neighbourhoods provide a higher quality of life, so properties situated there tend to get higher premiums.
Infrastructure quality matters
It is important to remember though, that commuters do not always have a positive effect on property values. Overuse of public transportation can result in overcrowding and diminished quality of service. Thus, this may put off prospective homebuyers. Living expenses will also increase due to the concentration of population and economic activity in places with good public transportation, which would be unfavourable for residents who live around there.
In addition, the kind of property matters. While residential properties generally benefit from being close to public transportation, the effects on commercial real estate are more complex. Office buildings located near public transport hubs may attract more tenants, but retail shop lots may face competition from shopping malls situated within integrated developments that offer convenient access to public transport as well. For many commuters, it is sweat versus air-conditioning in these kinds of scenarios.
Commuters are the essential lifeblood of cities and have a direct, significant influence on real estate values. Government bodies, policymakers and real estate investors alike must comprehend the dynamics of commuting patterns in order to give commuters the perfect journey. Malaysia can fully utilise its commuting population to boost economic growth and improve overall quality of life by investing in infrastructure, encouraging sustainable urban development and developing commuter-friendly environments.
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