The Impact of Metro Stations Proximity to Commercial Property Prices in Stockholm : A Hedonic Analysis

Abstract: The impact of geographical choices is crucial for both individuals and businesses to assess. Generally, companies are favored by being in accessible areas, which pushes up the demand and price for space. This phenomenon is referred to as a bid-rent theory. Infrastructure like roads and public transport contributes to accessibility. Earlier studies have shown that property prices are affected by all public means of transport but seems to be mostly affected by the accessibility to metro stations. With a quantitative research method, the aim of this master thesis is to explore how commercial property transaction prices are affected by the proximity to public transport specified on metro stations in Stockholm. Our study is performed on 123 officebuildings, and all observations are within the timeline of 2015 to 2021, in both the inner and outer city. The aim is also to explore the difference between those areas. In this study, a hedonic price model is used, where price/sqm is the dependent variable: y = m + β1x1 + … + βnxn + ε 10 independent variables are used, all arguably related to determine a price for a commercial office property. The variables Metro and I/O are in focus and considered our main variables to examine, Metro represents the distance to metro stations and I/O is a dummy for inner and outer city. In total, 7 models are presented in the results, with different combinations of independent variables. All models contribute to discussion, however, the model that we consider gives the most relevant results has a degree of explanation R2 of 46,7%. This model gives us significant results on both independent variables in focus, and the model itself. A large factor that interrupted better results was the limitations on observations. The interpretation of the model for offices in the inner city showed that the dependent variable changed 0,667 units when the independent variable I/O changed 1 unit. Moreover, when the distance to metro stations increased with 1 unit the dependent variable decreased with 0,0454 units per km. Furthermore, within the inner city the distance to metro stations tends to have less significance, to clarify the reason why, is yet to be discovered.