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DEVELOPING A METHODOLOGY TO CAPTURE LAND VALUE UPLIFT AROUND TRANSPORT FACILITIES

4. THE LAND VALUE MEASUREMENT METHOD

4.1 Introduction

4.1.1 The key to understanding the complex processes at work is to develop a robust methodology for the measurement of land value uplift and to test it in selected case study locations. The literature review has provided the necessary background information, and the main conclusions from that extensive investigation of the available material have been summarised in the previous Section. The experience gained from applying a similar method to estimate the land value uplift from the Croydon Tramlink is also included as Appendix 3 to this report. Both activities have informed the further development of the methodology for application to the selected case studies in Scotland.

4.1.2 This Section presents the land value uplift methodology, and then examines the data requirements and variable definitions in greater detail. The 'ideal' approach is presented and then the available data for Scotland is reviewed in the context of four selected case studies. Further investigations have been undertaken to gain information on other sources of data through searches, reviews and interviews with key individuals. The methodology has been fully developed for the Waverley Line as this is seen as a good example of a route that passes through urban and rural locations, and is of a sufficient scale to have measurable impacts. The report ends with a scoping specification of what would need to be done at particular points in time to allow a full analysis to take place. Similar methods can be developed for the other three case studies, but in this document they are less fully specified.

4.2 Land value method: Transport-Investment and Measurement of PROperty Value Enhancement (T-IMPROVE)

4.2.1 The T-IMPROVE methodology has been developed from the information examined from the extensive literature review, and from the experience of testing the draft methodology in Croydon. It is a combination of a top down and a bottom up approach and it is summarised as a three stage process in the graphic below (Figure 4.1).

Figure 4.1: The Structure of the Land Value Uplift Methodology

1. Stage 1: Contextual Analysis - this baseline analysis uses secondary information to provide a picture of what is going on in the economy more generally with respect to three interrelated areas:

• Market conditions
• Location factors
• Quality of development

The contextual analysis is important at the regional level (to cover the transport investment effects as a whole), and at the local level (as impacts from the investment have a differential effect by location).

Data Assembly - A range of secondary sources can be used to get some "feel" for change - census information, employment data, local planning decisions (and applications), skills of population, transport trends, inward investment, land ownership and availability.

In addition to the context, it is important to have land and property value information as it relates to the numbers and locations of residential and commercial transactions - such as land registry and valuation office information, register of Sasines, information from the Scottish Property Network, etc.

This contextual information provides three important inputs to the analysis:

• It gives an understanding about what is happening over time within the study area, and how this relates more generally to the property cycle.
• It helps identify suitable projects for investigation.
• It provides some of the explanation of the impacts that can then be used to structure the interpretative analysis in Stage 3.

Identification of schemes - Discussions need to be held with local transport planners and operators to help identify suitable schemes for study, both in terms of their characteristics, and in terms of the availability of suitable data over a period of time.

2. Stage 2 - Quantitative Analysis - this is the core of the analysis, and it needs to be carried out over the appropriate time period and to use data on individual property transactions - see the note on the key variables.

There are three interrelated parts to the quantitative analysis:

• Description of the scheme
• Accessibility analysis
• GIS analysis

Description of the Scheme - covers the route, frequency of service (for public transport), demand estimates (and actual use at out-turn), timing of the investment, key nodes (or interchanges), and the costs of the scheme.

The Accessibility Analysis - This estimates the changes in travel times before and after the scheme. This needs to be carried out at a very local scale, as in many urban areas there is little change resulting from a transport investment, as accessibility is already very high ³. This accessibility analysis complements the property value analysis, as it would be expected that most increase should link closely with accessibility change.

The GIS Analysis - allows data surfaces to be constructed for property price changes over space and time using transaction cost information. The basic Inverse Distance Weighting method allows the surfaces to be drawn and to then map the data according to whether prices are higher or lower than expected (i.e. the study area mean value). More complex Geographically Weighted Regression would allow other factors relating to the property (e.g. size, floor space and age) and the locality (e.g. proximity to services and facilities and density) to be controlled for.

3. Stage 3 - Interpretative Analysis - this important third stage can be divided into two main parts:

Expert Interpretation - this uses the output from the contextual and quantitative analyses to establish what effects the transport investment has had on property values in terms of their location and when the change has occurred. Links can be drawn between the accessibility analysis and the GIS analysis, and further analysis may be made to correlate the changes observed with business confidence, indicators of change (e.g. employment and image) and other investments taking place.

The output is the experts' views (the research team) on the land value uplift. A second output would be a commentary on what funding mechanisms might be most appropriate to use to recapture some of that uplift.

Stakeholder Interpretation - the results, together with the expert interpretation and commentary, would then be presented to focus groups of key actors. The involvement of business and property interests at this stage is seen as important to help with the interpretation of the quantitative analysis and to understand issues relating to impact and causality. Focus groups are seen as being more effective than questionnaires, and they aim to encourage discussion and convergence of views. The focus group meetings would help modify the expert interpretations and to discuss the value capture alternatives.

Profile of Land and Property Value Changes Associated with the Transport Scheme - This is the final output from the analysis. It would consist of a profile of land value changes associated with the transport scheme, together with a full explanation of the complexity of the interactions that have taken place over time and by location.

4.3 Recommendations on key variables

4.3.1 In the development of the methodology, two approaches have been used. One has been based on an extensive literature review (top down), where the main questions and findings have been presented in the key issues table (see Table 3.1 in Section 3). This has been complemented by an intensive case study approach (bottom up), where the Croydon Tramlink (CTL) experience has been used to draw a series of detailed lessons (Appendix 3). This Section draws together the two approaches to begin the process of specifying the key variables that need to be included in the land value uplift methodology, or Transport-Investment Measurement of PROperty Value Enhancement (T-IMPROVE).

4.3.2 The structure of the argument is clear, namely that new transport infrastructure investment increases accessibility, and this in turn results in additional demand for land and property around the stops, stations and interchanges. Over time there may also be second round effects as new development takes place and as new uses are found for existing development. Throughout the literature review, the impacts have been found to be positive but very variable (in terms of scale and location). In the CTL case study, the impacts were also found to be variable.

4.3.3 For public transport investments, measurable impacts are more likely to be found for rail and tram/metro investments, where there is a substantial improvement in accessibility and where there are discrete stops or stations around which land value changes can be identified. In the CTL study, land value change is difficult to observe, as the tram stops are very frequent (38 on the 28km system). For road investments, one would expect a similar situation, as the larger scale motorway or limited access investments would have greater accessibility impacts and concentrate land value change at the intersections.

4.3.4 There does seems to be consistency in thresholds over which impacts are to be found. The 800 m threshold for commercial properties and the 1000 m threshold for residential properties both come through as being consistent in the literature. The 1000 m threshold was used in the CTL. Note that very few studies have been able to use a control area to compare actual outcomes with those elsewhere in the local area (the counterfactual situation). The alternative approach is to use the distance decay argument, where impacts decay to thresholds, and it is assumed that beyond those thresholds no measurable impacts can be found.

4.3.5 It seems that changes in land values occur before the investment is completed and open, as well as over time. This means that the analysis should be based on data collected at four points in time. This is a conclusion from the CTL study, where data was used for two points of time prior to opening and one afterwards - there has not been sufficient elapsed time after the CTL was opened in 2000 to have a 4th point. The literature review was less clear on this as much of the data used was only collected for two points in time (before and after).

4.3.6 Two methods provide the most robust means for analysis, and this is confirmed in both the review and the CTL study. GIS methods allow data surfaces to be constructed for land value and property price changes over space and time, but it creates problems for interpretation when trying to control for other changes taking place - Geographically Weighted Regression should address these problems.

4.3.7 Hedonic Pricing (HP) methods fit regression equations to value and price changes, but at the same time include other control variables. HP methods are not explicitly spatial in their analysis, but can be extended to incorporate GIS surfaces.

4.3.8 However, the modelling research undertaken ( see Appendix 2) has identified additional approaches that could usefully support the above methods, or act as alternatives to certain elements of these methods. Further work is required in this area to translate this into practical results, as discussed in Appendix 2.

4.3.9 Quality data is crucial to the effectiveness of the detailed analysis, and the assessment of the wider contextual changes taking place. To identify land value and property market changes, data are needed for individual transactions. This means data should be at the unit post code level, which locates transactions at the 10-15 unit delivery point level. As aggregation takes place, the effects of the investment becomes harder to identify. The absence of data at this level of detail has been a major limitation on studies in the UK, and only in the US does it seem that this data is publicly available. The CTL study is one of the first (if not the first) in the UK to make use of this level of data.

4.3.10 In addition to the transaction data, the heterogeneity of the market means that data on other important variables should also be available. Information is required on the quality of the land or the property (condition, size, age etc), on the local availability of other facilities or services (shops, schools etc), and on the broader local market conditions (employment, skills, inward investment, planning applications etc). Some primary data collection may be necessary, but in both the review and the CTL study extensive use has been made of secondary data sources.

4.3.11 Within the context of these seven general conclusions above, there are more detailed comments on the exact nature of the variables needed to measure land value uplift. They can be grouped at three separate levels, relating to the individual property or land parcel, those relating to the locality, and those relating to the wider urban (or rural) area.

1. Those relating to the land and property markets -Local Data

i Property or land transaction value
ii Growth assessments and projected rateable values
iii Quality of property - including size (bedrooms or plot size), floorspace, age
iv Type of property - residential, office, industrial, retail or other
v Residential - detached, semi-detached, terraced, maisonette or flat
vi Availability of parking - public and private and location

2. Those relating to the locality around the transport investment - Neighbourhood Data

i Proximity to local services - schools, shops, health centres, libraries etc
ii Accessibility to employment
iii Accessibility to amenities - parks, open countryside, main roads, railways etc
iv Nearness to disamenities - industry, pollution generators (e.g. power stations)
v Density of development and mixed uses
vi Income effects or levels of deprivation in local area (employment, social or economic) - commentary on links to wider local economic factors
vii Vacancy rates in locality - for property and land

3. Those relating to the wider urban (or rural) area as a whole -Network Data

i Local levels of employment and journey to work patterns
ii Skills levels of population and travel patterns
iii Planning applications - new development and change of use
iv Inward investment
v Trends in property and building cycles - local market conditions
vi Quality of area - civic pride and image and developer interest
vii Other indicators - position in Experian's retail rankings

4.3.12 Additional information would need to be collected on the history and development of the transport investment project under consideration. The proposed database has three main scales of evidence that need to be assembled.

• The local level detail is required for the GIS (or hedonic pricing) analysis at the individual property transaction level over a period of time (four points).
• The neighbourhood level is primarily an extended accessibility analysis that measures the scale of change before and after (two points) the investment to a range of local facilities, and it also gives a picture of the quality of the local area (e.g. density, income, deprivation and vacancy rates).
• The highest level embeds the investment in the wider area through analysis of the network, linking the transport change to the local economic factors, before and after the changes (two points - Table 4.1).

Table 4.1: Data Collection Points

4.4 Data sources

4.4.1 Much of this information is available from secondary sources, but some may have to be collected by primary survey work or by digitising information from maps etc. Included here would be:

Local Data

(a) Land Registry: The LR is responsible for keeping and maintaining the Land Registry in England and Wales (but not Scotland - see point (c)) - the database contains value data for every residential property transaction in England and Wales since January 1996. It records the transaction price data, as well as the unit postcode (see information box below) into which the transaction falls and the type of property that was sold. ( www.landreg.gov.uk/propertyprice/interactive/ ).

(b) Valuation Office: These data are independently collected for both the residential and commercial property market sectors. It records land sales and transactions, but these are usually limited. For residential property, the database has location and price of property, and in addition for about 50 per cent of cases floor area, the type and age of the property are also available.

(c) Register of Sasines: This is a publicly available data source, and it lists the address, the price and registration date for each property transaction. It is available in digital format from the Land Value Information Unit at the University of Paisley. The data are supplemented by usage and transaction codes, descriptions and full postcodes ( www.paisley.ac.uk/unitland.htm )

(d) Registers of Scotland: This provides information about Scotland's land and property markets, including average property prices based on transactions, sales volumes and land values. Most of this data comes from the Register of Sasines, and includes the same list of variables - date of registration, price paid, property address, postcode, geo referencing and the parties names ( www.ros.gov.uk/businessservices/lpd.html).

Neighbourhood Data

(e) The ODPM index of employment deprivation (2000) can be used as a measure of the socio-economic characteristics of the neighbourhood (ward level) - it combines income, employment, health deprivation and disability, education, skills and training, housing and geographical access to facilities into a single index. The Carstairs ⁴ scores for Scottish Postcode Sectors are available (1991), using similar measures of male unemployment, car ownership, overcrowding and low social class, although the data is dated. The Scottish Executive also produces indices of multiple deprivation (2003), based on 2001 data and at the ward level. They are compatible with the ODPM index, and they are produced by the same organisation (Social Disadvantage Research Centre, University of Oxford). In addition, the Scottish Executive has also recently (June 2004) produced data on Scottish Neighbourhood Statistics, at www.sns.gov.uk . This covers Census and other public data items to a variety of fixed geographical levels, and is free.

(f) Proximity can be measured from digital maps to a range of local facilities (shops, schools, health centres etc), town centres, and amenities (open space, parks etc). These are produced by the Scottish Executive (Scottish Neighbourhood Statistics) on a broad range of topics, including access to facilities, community well being, economic deprivation, crime etc, and they are available at the ward and postcode levels.

(g) Retail footprinting information ( www.caci.co.uk/retailfootprint.htm ) provides a measure of retail potential, covering 2,200 comparison goods centres across Great Britain for 2004. It uses the levels of credit card transactions to model current shopping patterns, and can be used as a measure of local market conditions, or as a guide to retail market catchment areas.

(h) The Acorn groupings from CACI give a perspective on lifestyle changes over time in the UK according to whether the population are "affluent achievers, urban prosperity, comfortably off, modest means, or hard pressed" at the post code level. The five key categories are further broken down into 56 different consumer group types - http://acorn.caci.co.uk . However, this is primarily of value as a market analysis tool, and so may be less suitable to social and economic analysis.

(i) Scottish Property Network: This network has a database of more than 30,000 commercial and industrial properties ( www.scottishproperty.co.uk ).

(j) Other Commercial Market Datasets:

• EGI - Website for the Estates Gazette, a leading property journal. It provides news, research and information services on the commercial property market.
• PRIDE - Online database (PRIDENET) of available office and industrial business space for agents, but it only covers England and Wales. It contains about 17,000 available properties and the list is updated daily.
• IPD - This is a global information business, dedicated to providing independent market indices and portfolio benchmarks to the property industry.
• FOCUS - Online provider of commercial property information.
• PMA - PROMIS is an online database for the property market sector by town and type of property. It includes information on vacancy rates.

Network Data

(k) The Census: The Office of National Statistics have released the first results of the 2001 Census of population (2002) and data at a more disaggregate level are now being rolled out. Data at the ward level is now available (from April 2003) through the online SCROL (Scottish Census Results On-Line) by full post code - although output seems to be aggregated by about seven unit post codes in urban areas ( www.scrol.gov.uk/scrol ).

(l) Employment data: The Labour Force survey is carried out annually on a sample basis to establish the social characteristics of the labour force and the location of the workplaces by job type. PMA, the property research group provide employment data at the district level, and NOMIS in Durham also keeps employment data.

(m) Transport trends. These are available form national data sources, including the National Travel Survey and the Census 2001 Journey to Work statistics (Check for Scotland), but the level of disaggregation may limit their usefulness apart from helping with the general trends. More important may be local travel data sources from operators and surveys.

(n) Local Planning Decisions: These are assembled on a weekly basis, and give an indication of the activity in the local market. Related to this is the possibility of change of use as land values are clearly associated with the current designated use. In addition, analysis of application data can be informative, as they can demonstrate market demand which may or may not be constrained by planning considerations.

4.4.2 In addition to the sources outlined above, there are several important digital datasets that can be used for the GIS analysis. These include:

(a) OS-OSCAR maps the road network. This was used in the CTL study with ACCMAP to work out the changes in local accessibility resulting from the CTL. The ACCMAP database contains information on public transport routes, stations, stops (17,000 in London), and frequency levels. Public transport in the London context covers buses, underground, and the overground rail services, as well as tramlinks in Docklands and Croydon.

(b) ACCMAP produces isochrone maps divided into user specified segments to depict the areas that are accessible within a specified time range.

(c) OS-ADDRESS-POINT can be used to find the number of addresses in each property and to accurately locate property.

(d) OS-LAND-LINE records the location of ground features such as building outlines and fences with a high level of spatial accuracy (40 cms). Floor areas and plot area (floor plus garden) can b obtained digitally from this database.

(e) Postcodes online (Royal Mail) has a UK database of 27 million addresses that can be used to locate individual properties - there is a limit of 8 searches every 24 hours online, although unlimited access is available for a fee.

(f) Yellow Pages: This is a joint venture between the OS and BT to combine information from the Yellow Pages business directory with the grid references from ADDRESS-POINT.

(g) UpMyStreet.com (CACI Ltd) has postcode profiles based on the ACORN classification system, to cover local government information, council tax data, health, crime and schools information for the local area.

4.4.3 Not all of this data is essential, but if the best available methods are to be used, then information relating to the actual transactions is essential, together with some measure of quality of the property (or land). The importance of the other local factors depends on the variations along the transport corridor under study - the more homogeneous it is, the less important they are. The final group of variables represent the wider environment within which change takes place, and it is mainly of importance in the interpretation of the results.

4.5 Selection of case studies

4.5.1 In order to select a range of case studies to assess the appropriateness of the T-IMPROVE method, it was necessary to identify a range of proposed transport schemes from which case study transport schemes could be chosen. This was achieved via discussions and data searches with a range of sources, including the Scottish Executive, local authorities, transport operators and developers. Approximately 40 relevant transport schemes were identified.

4.5.2 A case study selection framework was also developed as part of the research. This consisted of a number of criteria, which were applied to assist in selecting suitable case studies. These criteria included:

• Physical nature of scheme (e.g. urban, rural)
• Geographical location (e.g. Edinburgh, Glasgow, Aberdeen - and Scotland vs. elsewhere)
• Scheme mode (e.g. road, rail)
• Scheme status (e.g. 'firm' or 'speculative')
• Modelling status (e.g. whether they were covered by existing transport-land use modelling packages

4.5.3 Further discussion on these criteria is provided below.

4.5.4 The brief for the research required that a range of transport schemes should be capable of inclusion within the method for measuring land value change. Specific reference was made to capturing rural transport schemes. In practice, there are few rural-only transport schemes. Therefore, a distinction between urban and regional schemes was made. Regional schemes are likely to have potential impacts upon rural areas, and were therefore considered to adequately capture this dimension.

4.5.5 Initially, there was concern over the availability of suitable transport schemes in Scotland. Consideration was therefore given to examining schemes in the rest of the UK. However, it was concluded that there would be considerable value if Scottish-based schemes could be examined, and so the selection process was orientated towards this objective, subject to the realism of the results.

4.5.6 A further geographical dimension was to ensure a reasonable balance was achieved between different parts of Scotland. In particular, it was felt sensible to try and capture transport schemes covering both Edinburgh and Glasgow.

4.5.7 Both road and rail schemes were included in the selection process, although not water-based schemes or air transport improvements. Road and rail schemes were selected as the literature review demonstrated that there is greater UK and international experience of the impacts of such schemes. This experience could therefore be used as a reference point for assessing impacts.

4.5.8 An attempt was made to distinguish between schemes that were 'firm' and those that were 'speculative'. This required judgement, and so cannot be taken as a clean-cut decision process. Firm schemes were classified as such on the basis that they had secured all or most of their funding, and/or had a firm commitment or approval for their implementation. Speculative schemes, in contrast, were those schemes that had uncertainty over their funding, and/or approval or planning permission for their development was undecided.

4.5.9 This particular criterion was also relevant in relation to the purpose to which the case studies were to be put. Basically, the method for assessing land value change should be amenable to application to both firm and speculative schemes.

4.5.10 However, if alternative funding methods were to be tested, then at this stage it would be more appropriate to use speculative schemes. This is because the application of funding methods to firm schemes might raise expectations about the use of such funding routes for the transport scheme in question. In any event, an alternative approach to testing the funding methods was used, as explained in Sections 5 and 6.

4.5.11 A further element of the selection process was to identify whether the transport schemes were capable of inclusion within the various transport-land use modelling systems in place. This was not used as a primary selection criterion, but it was hoped that there would be a number of transport schemes that would be fit this criterion, and so be amenable to further investigation by such modelling systems if necessary.

4.5.12 Appendix 2 provides details on the benefits and issues raised by using land use transport interaction (LUTI) models in the land value capture (LVC) process. This explores how the various forms of LUTI model could be adapted to meet land value capture requirements.

4.5.13 The key conclusions are that it is not possible to move directly to using existing LUTI models in the kinds of analysis that would be needed to provide the full demonstration of LVC possibilities. However, there are a number of options for developing this capability, as well as possibilities for the enhancement of the proposed T-IMPROVE method. These can be summarised as follows, with further explanation in Appendix 2:

• Option a) strategic testing of selected LUTI models in the appraisal of LVC proposals.
• Option b) major enhancement of existing LUTI models to enable inclusion of LVC processes.
• Option c) application of selected LUTI model (e.g. TELMoS) alongside T-IMPROVE methodology.

4.6 Selected Case Studies

4.6.1 Using the above selection framework, the original 40 transport schemes were examined. From this list, 12 transport schemes were considered to offer potential for investigation, and are summarised in Table 4.2 below. The schemes have been split on the basis of whether they have an urban or regional emphasis, and whether they are 'firm' or 'speculative'. In addition, those schemes that are compatible with the LUTI modelling exercises are identified.

Table 4.2: Potential Transport Scheme Case Studies

4.6.2 Based upon the above short-list of transport schemes the project team reviewed material to arrive at a set of case studies to use in the application work. Those selected were the Waverley Line, the A77/M77 road improvement, Glasgow airport rail link and the South east Edinburgh LRT scheme. It was agreed to 'major' on the Waverley Line in terms of 'measurement assessment', with shadow-testing of the other three schemes in terms of measurement potential.

4.7 Case study results

Introduction

4.7.1 In this section we look in more detail at the data sources that might be used in the development of the methodology. These data are summarised in Table 4.3, and the information contained therein is generally applicable to all four of the schemes, although it has been evaluated primarily with regard to the Waverley Line.

4.7.2 In all of the studies, it will be necessary to gather information locally, such as through relatively labour-intensive archival research in planning offices. The Waverley Line is by far the best documented of the four - it has its own website - while the others, which do not appear to have the same historical resonance, are much less well documented, and therefore more difficult to put in context.

4.7.3 There is a sense, then, in which each of the four schemes can be seen as offering different contexts for the application of the same method, using the same core data sources, augmented in all cases by local archival research. The gathering of certain core data from the web-based archives is a relatively easy matter, and a basic dataset can be assembled quite quickly. This means that the method itself will at least be consistent in terms of the nature, quality and sources of the core data. Nonetheless, it is our view that the quality of the data used to contextualise the core datasets is of paramount importance, and we would expect that the gathering of this contextual matter would be labour-intensive and thus time-consuming.

4.7.4 We describe below briefly each of the schemes, and highlight aspects of each of them that we think will have a bearing on the data collection process.

Waverley Line

A Brief History of the Waverley Line

4.7.5 The line itself first carried passengers and freight in the early 1860s, and formed part of the Edinburgh - St Pancras main line. The name itself derives from Sir Walter Scott's series of 'Waverley' novels. The original Waverley Line was closed in 1969 as part of British Rail's cuts in the rail network.

4.7.6 Already in 1969 there were attempts to prevent the closure of the Waverley Line through the means of a consortium, but the negotiations with British Rail collapsed in 1970, and the line fell into disuse and disrepair.

4.7.7 In 1999, a feasibility study was carried out on behalf of the Scottish Executive. This was published in 2000, and came out in support of the project as an economically viable concern. A public consultation exercise took place from 2002 to 2003, and the Bill is currently in the process of being put before the Scottish Parliament. The Scottish Borders Council agreed its own strategy for contributing to the funding on 26th February 2004.

Data Gathering

4.7.8 That the data exists is plain enough, but it needs to be chosen with care, and with a clear focus. In other words, the choice of the data will be determined by the desired 'final product', in this case a GIS-based model of sufficient detail to establish causal links with a reasonable degree of certainty.

Planning History of the Waverley Route

4.7.9 This is much more difficult to pin down. It needs a lot of archival research, and would likely involve trawling through local newspapers and following up planning decisions.

4.7.10 Our view at this stage is that this would be the most time-consuming and labour-intensive part of the process. However, it is also an essential part of the methodology, insofar as the quality of the contextual data derived from this phase of the research would play a large part in determining the extent to which meaningful causal links can be made between the (re)construction of the Waverley Line and increases in land values local to the Waverley Line.

4.7.11 Two hypothetical questions serve to illustrate the point. For example, we might ask whether recent planning decisions that encourage professional firms to move into an area have been the driving factor behind increases in land values, while the Waverley Line takes on a more peripheral significance as a driver? Or, more prosaically, how would the relative causal significance of the closure of an abattoir or an unpleasant factory be assessed with regard to changes in local land values in the context of other local changes such as road improvements?

Information and Data Sources

4.7.12 Section 4.4 has given a general overview of information and data sources for the United Kingdom, and we draw particular attention to the Scottish Property Network http://www.scottishproperty.co.uk as an efficient portal that carries up to date news on the Scottish property market and industry, as well as a large database of commercial and industrial properties, and some useful links to other websites.

4.7.13 For the Waverley Line itself, the website of the Waverley Railway Project http://www.waverleyrailwayproject.co.uk has contextual information on the project, a route map, press releases, timescale information and so forth. Detailed maps of the immediate localities of each of the proposed stations can also be downloaded as PDF documents, and these make possible the detailed analysis (down to unit postcode level) of the surrounding area.

4.7.14 Table 4.3 below summarises those data sources that seem most likely to be useful in the development of the methodology. They are all web-based and many offer downloadable data that can be manipulated as required - an important consideration.

4.7.15 The datasets will need to be used carefully to build a picture of the situation: thus SCROL (which only offers downloadable datasets in html format) might be used to generate selected tables of Scottish Census Data to check that data, while CasWeb might be used to generate more detailed and sophisticated datasets (in CSV format) that can be used in the analysis. Data from ACORN might then be used to explore the general socio-economic context at postcode level, which would be augmented by statistical data on the local demography, and a picture thus built up.

4.7.16 In summary, most of the data for the neighbourhood and network levels is already available ( see Table 4.3). However, some supplementary data collection is required for the accessibility analysis. This would be part of the LUTI local scale modelling and would require information on distances and attractiveness of local facilities. The main sources would be the Census data (updated where possible - which reinforces the value in undertaking case study work soon, otherwise the data will lose its value), labour and employment statistics, local planning information, and available measures (e.g. ODPM index of employment deprivation and retail footprinting). This part of the analysis is really a data assembly process that is required to establish the contextual situation at the key points of time (i.e. before and after both short and medium term - Table 4.1).

4.7.17 For the local data, it is necessary to have the Land Registry (and the Valuation Office Agency) data for the individual property transactions. This information is available, but there are often confidentiality constraints, even though the GIS and Hedonic Pricing analysis will not reveal the exact locations of those transactions, as surfaces are built up. Again, data are required at different points in time and should be tagged to other local characteristics such as property type, ownership patterns and size. This may require additional fieldwork and examination of local maps to measure plot size and location factors. Provided that access can be obtained to the Land Registry (and Valuation Office agency) data from the Register of Sasines, the amount of new data collection is limited. There may however be costs in accessing some of the commercial data sources (e.g. i-POLIS).

The A77/M77 Road Link

Source: Glasgow Prestwick Airport website
http://www.gpia.co.uk/AirportInfo/HowTo/ByCarPopup.asp?img=1

4.7.18 The major difference between this and the other schemes, of course, is that this is a road scheme, which aims both to improve travel times on the A77, and to improve the road linkage between Glasgow and Prestwick airport. Part of the scheme has already been built, with other sections at various stages of development. The techniques described above for the Waverley Line can be used for the A77/M77, although the process could be expected to be somewhat messier, since road networks do not have the "clean" centre of a catchment area that is provided by a railway station.

4.7.19 See also http://www.scotland.gov.uk/pages/news/2003/02/SEfm132.aspx which makes some reference to the A77/M77 schemes.

Source: SPT website
http://www.spt.co.uk/Travel/airptlnk.html

4.7.20 The Glasgow airport rail link, from Paisley St James to Glasgow airport (indicated as red on the above plan), is seen as the lever for more general improvements to the line from Glasgow Central Station. These improvements are expected to increase both capacity and speed. Thus while the link itself might yield little in terms of the application of the method, the improvements could offer an interesting means of focusing on the way in which the method might be applied to schemes that improve transport infrastructure. In other words it may be possible to filter out the effects of building new infrastructure - noise, disruption, effects on the town and landscapes - from the benefits such as improved travel times.

4.7.21 However, the fact that the changes would be minor relative to building a new railway line means, of course, that isolating a chain of cause and effect would become more difficult still.

4.7.22 See also lhttp://www.spt.co.uk/Travel/airptlnk.htm for further (but limited) information.

SE Edinburgh LRT (The South Suburban Line)

4.7.23 As with the Waverley Line (from which this line branches), the South Sub project is based around re-opening an existing line. It is the project that most clearly mirrors the Waverley Line project, and we would expect that it would share the same issues in terms of development and application of the method. It is also the least well-documented project of the four.

Table 4.3: Assessment of data availability and quality

4.8 Conclusions and recommendations

4.8.1 A workable methodology has been developed to assess potential land value change associated with transport infrastructure schemes. This has been based upon a combination of literature review, the testing of a draft methodology at Croydon, and an examination of potential data sources and issues in Scotland. The resulting method, which is based upon a three stage process, has been termed T-IMPROVE (Transport-Investment and Measurement of PROperty Value Enhancement).

4.8.2 A set of 7 key recommendations has been outlined dealing with key data items or variables required in order to apply T-IMPROVE. These provide a framework for the application of the land value measurement method, along with more detailed guidance on the levels of analysis required to apply T-IMPROVE, namely at a local, neighbourhood and network level.

4.8.3 T-IMPROVE is a method designed to quantify the scale of change in land value arising out of a transport investment at the very local level using individual property and land value transaction data. Its purpose is to understand the complexity of the linkages between transport investment and property markets, so that the transport related factors can be isolated from all other factors (e.g. economic and housing cycles, inward investment, local economic factors etc.).

4.8.4 As specified in Appendix 2, it is likely that hedonic pricing (HP) or geographically weighted regression (GWR) methods would be used, with the team favouring GWR as there are less requirements in this method for primary data collection. In addition to the local scale issues, time is also important as the property market effects occur over a period of time, hence the recommendation that data are analysed at four points in time.

4.8.5 When the basic understanding of the processes and the scale of change have been understood, then it will be possible to link T-IMPROVE with predictive methods (i.e. LUTI models). This will probably be achieved through the use of the most disaggregated LUTI models (e.g. TELMoS) in conjunction with GIS based accessibility models that can link changes in transport to the property market changes. The treatment of both the time elements (i.e. when the impacts are likely to take place) and the scale effects (i.e. the most appropriate levels of disaggregation) need further research in particular.

4.8.6 T-IMPROVE has been tested at a strategic level at the following potential transport schemes in Scotland: the Waverley Line; the A77/M77 road link, Glasgow airport rail link, and South East Edinburgh LRT. This was to assess the potential availability of data to enable the T-IMPROVE to be carried out, rather than a detailed application of the method.

4.8.7 This strategic testing has demonstrated that the potential exists to apply T-IMPROVE in a Scottish context, although the data collection exercise itself needs to be recognised as potentially significant. The strategic testing indicated that the necessary quantitative and qualitative data is available to carry out appropriate and meaningful analysis, as are the systems for accessing the various data. Relevant agents and agencies are also relatively clearly identifiable, and likely to be amenable to inclusion in the evaluation process. There are also various useful methodological issues raised by each of the case studies that can help in the further development of T-IMPROVE.

4.8.8 A more detailed testing of the T-IMPROVE methodology should be directed at all locations along the route of a proposed transport investment where an impact on the property and land markets is likely to take place, and these changes would be linked to changes in accessibility. It should be noted, however, that T-IMPROVE is not a strategic method itself, but a micro analytical approach that examines changes immediately around the stations, and links those results to cover the whole corridor along which the transport investment runs. It is directed at individual schemes and not areas as a whole.

4.8.9 T-IMPROVE is essentially an empirical tool. It can demonstrate the actual impact of a transport scheme on land values over a period of time. These valuation surfaces can be used to carry out modelling and statistical analysis with local socio-economic and transport data. The methodology can therefore demonstrate what the scale and type of impacts of a transport scheme are, as well as illustrating the complex relationships between variables and processes.

4.8.10 It needs to be noted, however, that the detailed application of T-IMPROVE to one transport scheme does not prove that, for other schemes in different locations, types and scales, value uplifts would occur, as well as in a form that can be taxed. Ideally, a number of case studies should be examined in order to provide a reference of comparables. This data-set would allow inferences to be made of the land value impacts arising for a range of proposals, and which can be defended if challenged (similar to property valuation comparables or the TRICS transport database).

4.8.11 Work on trying to establish the mechanisms at work in how transport schemes can influence land values is at a relatively early stage. The work carried out at Croydon has indicated that values are measurable, and the strategic assessment of the four transport schemes in Scotland has suggested that measurement of change should be possible here. However, the T-IMPROVE method needs to be tested and refined at a series of case studies in different locations. This is how a fuller understanding will be built up.

4.8.12 Whilst the empirical assessment that T-IMPROVE can provide is important, it has to be recognised that this is not a predictive tool in its current form. Land use transport interaction (LUTI) models offer this potential, although not in their current form ( see Section 6 of Appendix 2). It should also be noted that, to date, no work has been undertaken to assess how successful the various LUTI models operated by Scottish Executive and others have been at predicting changes in rental values.

4.8.13 There are a number of ways in which the potential of existing LUTI methods could be developed. This includes:

(a) examining how well existing models with relatively fine zones (e.g. TELMoS) can contribute to the earlier stages in appraisal of land value capture proposal - especially having regard to their ability to consider how land value capture schemes may affect occupiers' decisions in ways which affect the achievement of other local and national government objectives;

(b) examining whether it is possible to modify or extend LUTI models to work at much finer spatial levels and possibly on samples of individual properties;

(c) assessing, either as a way of achieving the above or as an alternative to it, whether it is possible to use the existing or finer zonal outputs of LUTI models within Hedonic Pricing or Geographically Weighted Regression techniques as a way of incorporating those effects which are better or only handled in LUTI.

4.8.14 In progressing matters we recommend that option (a) should be followed up by looking at a sample of TELMoS results, showing the rent impacts of transport schemes to asses their usefulness for consideration in land value capture. This small piece of work could take place later in 2004, and should probably involve:

• (i) testing a (probably hypothetical) scheme whose impacts are fairly clearly expected in the light of the present study; then
• (ii) examining the TELMoS results in the light of those expectations.

4.8.15 The examination should consider whether the TELMoS results conform with the expectations; if so, whether TELMoS adds value to what can be informally predicted; and if not, whether TELMoS provides a convincing account of why the simple expectations may not be correct. If the findings are encouraging, consideration should be given to the possibility of incorporating land value capture methods into TELMoS in order to assess the impacts of land value capture itself.

4.8.16 Option (b) should be kept in mind as a possible major enhancement of a model such as TELMoS, or as a new research study. Option (c), meanwhile, should be included - as a possibility for further investigation - in the specification for any future work using Hedonic Pricing or Geographically Weighted Regression.

4.8.17 In summary, improvements in the measurement of the value change associated with transport schemes revolve around a progressive extension of LUTI modelling to the T-IMPROVE method, as summarised below:

• A strategic testing of selected LUTI models in the appraisal of land value capture proposals.
• A major enhancement of existing LUTI models to enable inclusion of land value capture processes.
• The application of a selected LUTI model (e.g. TELMoS) alongside the T-IMPROVE methodology.

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