1. Seppo Laakso Kaupunkitutkimus TA Oy
Rail projects, land value and value capture in the Helsinki Region (and the case of Eastern metroline)

2. Land use before metro
(car & bus connections)
The impact of the metro on land use Metro tends to increase the density of land use and to make the surroundings of metro stations potential local centres Interplay on planning and markets - accessibility increases market demand - planning principles support development in station locations
Land use after metro
Construction close to the stations
demand for density
around the stations: services, offices, blocks of flats
lower density in outer zones
manufacturing and storage move away
Source: Raideliikenteen hyödyt.
Benefits of rail transport)
HSL 2010/30

3. Improved accessibility raise the land value in the area of influene
After metro
Before metro
Distance from city centre
Metro stations

4. Dependence of the housing price on distance to city centre in the Metropolitan Area of Helsinki Estimations based on housing price data from 1990s Index, transport distance 50 min. = 100 (all directions)
1 min. shortening in centre distance
1 – 1,5 % increase in housing price
Lähde: Laakso 1997

5. Index, station distance 1250 m. = 100
The micro location in the vicinity of metro station affects the demand and willingness to pay for location
Estimations based on housing price data from 1990s
Index, station distance 1250 m. = 100
Lähde: Laakso 1997

6. Impact of the Helsinki metro (Eastern metro lines – taken into use in 1983 (Vuosaari line in 1998)
Estimated increase of total land value caused by the metro lines in Eastern Helsinki: ~ 1500 Mill.Eur (year 2009 price level)
Realised land value compared with land value without metro (old buss based transport system)
Value increase division between the land owned by the city and private land owners (~50% - 50%)
No benefit fees or land rent increases
Construction costs of Helsinki Metro (Eastern metro lines) ~ 1200 Mill.Eur (year 2009 price level)
Financed by tax income of the city of Helsinki
No direct value capture
Non-residential land (business, industrial etc.)
Increase of property values aroud stations
Enabled strong local service centres (shopping & public serv.)
Itäkeskus
Herttoniemi
Vuosaari
Myllypuro motion centres
Not realised without metro
Created preconditions for the change of Vallila-Sörnäinen-Kalasatama area from port and industrial zone to business concentration
Residential land
Made possible the relatively dense urban structure in the metro zone – not possible without metro
Without metro, respective housing construction would have realised elsewhere in less accessible locations
Makes it possible to enhance the urban structure further towards East (Östersundom etc.)
Lähde: Raideliikenteen hyödyt.
HSY 2010/30

7. Value capture Land use and building legislation provides alternative means for value capture
Development of land owned by the municipality
Purchase of raw land (or old ownership)
Planning and infrastructure
Transport investments
Sale (auctions) or renting (usually subsidised) of lots to private developers
Own development by municipal organisations (eg. Social rental housing)
The value incease caused by planning, improved accessibility (transport) and infrastructure ends to the municipality
Land use contract
Contract between private land owner (developer) and the municipality
Land owner gets right to develope the land
Detailed plan: developer – municipality
Developer pays compensation to the municipality
Or builds infrastructure or services (eg. Local park, kindergarten given to the municipality
Development area procedure
Complicated procedure
Not used in practice
Property tax
On land and buildings
New land use in good locations add property tax income
Development of own land is the dominating policy in Helsinki
Large ”old” land assets
Active land purchase in potential future development areas
Also in many other major cities (eg. Tampere, Oulu) and in towns in Helsinki region (Hyvinkää, Järvenpää, Kerava)
Land use contracts is the principal policy in Espoo and in some rural municipalities of Helsinki region (Kirkkonummi, Sipoo,..)
Mixture policy: Vantaa
The role of land use contracts or development area procedure (if modernized) is becoming more important when completary construction of build areas and lots is increasing
Note: The income to municipality from the development ins normally not earmarked for a certain investment.

8. Income from land in the Metropolitan Area of Helsinki Helsinki, Espoo, Kauniainen, Vantaa, year 2011
Property tax (land and buildings) 310 M€ 300 €/capita
Rent income (land and business premises) 240 M€ 220 €/c.
Net income* from land sales
and land use contracts** ~50 M€ 45 €/c.
Total M€ 570 €/c.
Investment and maintanance costs
of infrastructure (share of municipalities) ~700 M€
* Net income = sales – purchases & land improvement costs
** Srong variation between years; conflicting data sources