Impact of road infrastructure development on properties price in ha noi city

Impact of road infrastructure development on properties price in ha noi city Impact of road infrastructure development on properties price in ha noi city Impact of road infrastructure development on properties price in ha noi city Impact of road infrastructure development on properties price in ha noi city Impact of road infrastructure development on properties price in ha noi city Impact of road infrastructure development on properties price in ha noi city

VIETNAM NATIONAL UNIVESITY, HANOI

VIETNAM JAPAN UNIVERSITY

LE THIEN TRUNG

IMPACT OF ROAD INFRASTRUCTURE DEVELOPMENT ON PROPERTIES

PRICE IN HA NOI CITY

MASTER’S THESIS

VIETNAM NATIONAL UNIVESITY, HANOI

VIETNAM JAPAN UNIVERSITY

Hanoi, 2020

LE THIEN TRUNG

IMPACT OF ROAD INFRASTRUCTURE DEVELOPMENT ON PROPERTIES

PRICE IN HA NOI CITY

MASTER’S THESIS

MAJOR: INFRASTRUCTURE ENGINEERING

CODE: 8900201.04QTD

RESEARCH SUPERVISORS Prof HIRONORI KATO

Dr PHAN LE BINH

TABLE OF CONTENTS

Page

TABLE OF CONTENTS I LIST OF TABLES II

LIST OF FIGURES iii

LIST OF ABBREVIATIONS iv

ABSTRACTS v

ACKNOWLEDGEMENTS vi

CHAPTER 1: INTRODUCTION 1

1.1 Introduction 1

1.2 Background and necessity of study 3

1.3 Objective of study 7

1.4 Scope of study 8

CHAPTER 2: LITERETURE REVIEW 12

2.1 The relationship between infrastructure investment and real estate 12

2.2 Overview of related policies in Viet Nam 14

CHAPTER 3 METHODOLY 17

3.1 Differences-in-differences Methods 17

3.2 Hedonic Pricing Methods 20

CHAPTER 4: POTENTIAL IMPACTS OF ROAD INFREASTRUCTURE DEVELOPMENT ON HOUSING PRICES 21

4.1 Data characteristics 21

4.2 GIS-based database development 24

CHAPTER 5: MODELS 29

5.1 Baseline Model 29

5.2 Differences-in-differences in Stata Application 35

5.3 Estimate Results 37

CHAPTER 6: CONCLUSION 50

REFERENCES 51

REFFERENCE ON RELATED OFFICIAL DOCUMENTS 53

LIST OF TABLES

Page Table 1.1 Land Price List at Tay Ho District (Attached to the Decision No 30/2019 / QD-UBND dated December 31, 2019 of the Hanoi People's Committee) 5 Table 1.2 LAND PRICES IN NEW URBAN AREAS, AUCTION AREA,

RESETTLEMENT AREA, AND HIGH-TECH PARK (Attached to the Decision

No 30/2019 / QD-UBND dated December 31, 2019 of the People's Committee of Hanoi City 6 Table 1.3 Table of house price comparison between 2014 and 2019 7 Table 3.1 Simple differences-in-differences 18 Table 4.1 Definitions of Potential Variables for Properties Price Functions in 2014-

2019 22 Table 5.1 Descriptive statistics of variables used in property price functions in 2014 and 2019 33 Table 5.2 Correlation between potential explanatory variable 35 Table 5.3 Table of data collection of samples of the buffer zone below 50m in 2014-2019 37 Table 5.4 Estimation Results of Difference-in-Differences on case 1 of Properties Price Functions (N=567) 40 Table 5.5 Estimation Results of Difference-in-Differences on case 2 of Properties Price Functions (N=567) 42 Table 5.6 Estimation Results of Difference-in-Differences on case 3 of Properties Price Functions (N=567) 43 Table 5.7 Estimation Results of Difference-in-Differences on case 4 of Properties Price Functions (N=567) 45

LIST OF FIGURES

Page

Figure 1.1 Administrative map of Ha Noi City 8 Figure 1.2 The map divides 12 groups of urban districts and choose scope of study 9 Figure 1.3 Boundary of 8 wards of Tay Ho district 10 Figure 3.1 Graphical of Differences-in-differences explanation 19 Figure 4.1 The boundary network system and existing transportation system of Tay Ho district 26 Figure 4.2 Population of each ward over the years 2014-2019 27 Figure 4.3 Collection‟s sample in 2014-2019 by GIS-base 29 Figure 5.1 Import data collections and analysis into Data Application using excel….38 Figure 5.2 How to perform finding Robust Standard Error value in Stata 39 Figure 5.3 Observed property prices versus estimated property prices (Mode choice in Case 1) 47 Figure 5.4 Observed property prices versus estimated property prices (Mode choice in Case 2) 48 Figure 5.5 Observed property prices versus estimated property prices (Mode choice in Case 3) 49 Figure 5.6 Observed property prices versus estimated property prices (Mode choice in Case 4) 50

LIST OF ABBREVIATIONS

PD_50 Population Density in buffer zone 50m

PD_100 Population Density in buffer zone 100m

PD_200 Population Density in buffer zone 200m

PD_500 Population Density in buffer zone 500m

ED_100 Employment Density in buffer zone 100m

ED_200 Employment Density in buffer zone 200m

ED_500 Employment Density in buffer zone 500m

SD_100 Street Density in buffer zone 100m

SD_200 Street Density in buffer zone 200m

SD_500 Street Density in buffer zone 500m

Exchange rate: 1 USD = 21,215 VND (year 2014) and 23,162 VND (year 2019)

ABSTRACTS

This study aimed to quantitatively analyze the impact of road infrastructure developments in Hanoi city on real estate price in residential areas surrounding the development A cross-sectional analysis using Difference-In-Difference method was applied Data on property price was collected in Tay Ho district of Hanoi city

in the year of 2014 and 2019 Hedonic method was applied to estimate housing price as a function of variables representing attributes of the house (area, number of floors, car accessibility, etc.), accessibility to urban facilities (distance to new road, distance to main street, distance to public facility, distance to the West Lake etc.) and attributes of neighborhood (population density, employment density, street density etc.)

First, result of this study confirmed that projects for road infrastructure development caused an impact on housing prices in its surrounding area

Second, treatment group, defined as properties in 500 meters radius from the new road, received impact from the road investment while the others located farther away (defined as control group) did not receive this impact

Finally, the result showed that the selling price of properties in the treatment group after the opening of the new road is around 6-14% higher than the control group

ACKNOWLEDGEMENTS

I would like to express my sincere gratitude to Professor Hironori Kato, Dr Phan Le Binh, Ms Nguyen Thi Mai Chi for your invaluable instructions, advices and support for my thesis I am also indebted to the government of Tay Ho district, especially the office of Urban Management for providing me related data and documents I am also grateful to two companies who supported me in achieving data on individual property prices in Ho Tay district Finally, I am particularly grateful for my classmate, my family and other professors, lecturers for your great help and support during my two years study in Vietnam Japan University

CHAPTER 1

INTRODUCTION 1.1 Introduction

Located northwest of the center of the Red River Delta, Hanoi is located from 20° 53' to 21°23' Northern latitude and 105° 44' to 106° 02' East longitude It borders with Thai Nguyen and Vinh Phuc provinces in the North, Ha Nam, Hoa Binh in the South, Bac Giang, Bac Ninh and Hung Yen in the East, Hoa Binh and Phu Tho in the West Hanoi is 120 km from Hai Phong port city, 87 km from Nam Dinh city forming the 3 main poles of the Red River Delta After the administrative boundary expansion in August 2008, the city covers an area of 3,324.92 km², located on both sides of the Red River, but urban activities concentrate mainly on the right bank

Hanoi has 30 district-level administrative units, including 12 urban districts,

17 suburban districts and one town; formed by 579 commune-level administrative units, including 383 communes, 175 wards and 21 towns 55% of the population lives in urban areas and 45% of the population lives in rural areas

The system of urban infrastructure Hanoi City is a comprehensive and covers many fields of both technical and social infrastructure In the scope of this research, only the urban technical infrastructure system is mainly concerned with: transport system (including road network, railway, public transport system, parking lot); urban of water supply system; drainage and treatment system

In general, in recent years, the urban infrastructure system of Hanoi City has changed significantly, gradually changing the appearance of the city in a synchronized, modern way and playing an increasingly important role in the socio- economic development of the City However, the infrastructure system is still weak and inadequate, insufficient to meet the needs of the people, the requirements of socio-economic development and the requirements of a civilized and modern city of stature which is the capital of a country

upgrading and renovation have been implemented: Ring Road I, Kim Lien - O Cho Dua Section, Ring Road 3, Thanh Tri Bridge Ring Road, Ring Road 3, Linh Dam - Mai Road Translate, Road 5 extends the section of Chui - Dong Tru - North Thang Long, Lac Long Quan Road, Cat Linh - La Thanh - Yen Lang Road, Le Trong Tan Road, Phuc La - Van Phu Road, Construction, opening and upgrading of roads have contributed to improve the flow and reduced the overload pressure on the city transport network

Currently, the City has 16,093 km of roads with an average road density of 4.81km / km2, of which the City manages 1,757km of road, 373 bridges / 24,315meters with the narrowest road cross section; 13,902km of roads is managed

by districts, towns and more than 12,946km of rural roads The ratio of land area for transportation is low, about 7-8% (compared to the planned target of 20-25%) Average road density (km / km2) and ratio of land area for transportation in areas (%): Historical inner-city area (including 04 old inner-city districts) 5.94km / km2,

11 , 38%; the expanded inner city area (from ring road 2 to Nhue river) 3.64 km / km2, 7.85%; the expansion area south of the Red River (from Nhue River to Ring Road 4) 0.67km / km2, 3.82%; the expansion area north of the Red and South rivers

of Ca Lo River is 1.18 km / km2, 2.74%; suburban districts and satellite urban area 0.61km / km2, 1.84% These indicators show that the road network is still very low compared to the requirements

It is a commonly asked and investigated question whether the construction of new road has a positive effect on regional economic performance In Vietnam one can often read in the newspapers that one alleged purpose of building new road is to help improved the existing road and solve complicated traffic problems (traffic jam, traffic service) In this thesis, analysis of the impact of the vicinity of infrastructures engineering on a specific area of the economy, the residential properties market, in particular residential property prices

In Vietnam, there are least some reasons why one might think that the emergence of the new roads has a positive effect on the real estate First, it has a direct effect for the residents nearby since they turn out be “closer” to desirable lactations measured by the duration of travel time The second, and presumable

stronger channel of influence on house prices is that the better accessibility attracts new companies and services to the near locations (owner can rent a house for business,) The companies and services might have a positive effect on the demand for residential house and also through generating better business In this thesis, the end result will be the impact of the possible effects

1.2 Background and necessity of study

In recent year, The Government of Hanoi has been heavily investing into urban infrastructure Of which, road transportation was invested VND 75,550 billion dong (~3,2 billion USD) in period 2006 – 2014, thus the annual average is

350 million per year Period of the year 2014-2019, that investment is VND 40,670 billion dong (~1,8 billion USD), the annual average is 360 million per year In addition, about 15,060 billion VND (~ 600million USD) is invested in social infrastructure Therefore, Strategies for development and development of new infrastructure systems in Tay Ho District, Hanoi City are the construction and expansion of new roads alongside the main roads of the district's internal road network When new infrastructure projects are implemented it is one of the important issues in the following analysis and since it has been newly built and expanded in the area, a road system Status: Once the project is created, house prices will be able to adjust even after the new road project is opened, reduce traffic congestion, economic – cultural – social development… On the other hand, it seems reasonable to assume, that due to political nature of new road construction decisions people cannot be sure about the exact time and final path of the road construction until the final contract is signed In each period from 2014-2019, it was shown that in these years there were small infrastructure development investment projects including transport development projects, social and public infrastructure development projects Especially, these areas of public finance investment will be announced to the public from the end of 2013, early 2014

This study will significantly contribute to consolidating knowledge for a variety of reasons Firstly, in Vietnam, It is thought that investing in technical infrastructure development projects, in fact, causes real estate values to increase

increase the value of their homes but also help them be more able to do business when the road is expanded (especially the type of store opening service, restaurant…) but in fact, at present, there is no clear research in Vietnam to say how much their benefits are? Second, Vietnam does not currently have policies and mechanisms to properly benefit its part from the houses that directly benefit from the development of such infrastructure Example: According to Clause 2, Article 8

of Circular 153/2011 / TT-BTC, residential land use tax is determined according to the following formula:

Tax payable (VND) = Tax amount incurred (VND) + Tax amount to be

exempted or reduced (if any) (1)

In Tax amount incurred = Taxed land area The price of 1m2 of land (VND

/ m2) x tax (%) (2) Thus, to calculate the arising tax, it is necessary to know three factors: the area of taxable land, the price of 1m2 of land and the tax rate In addition, the price

of houses depends on the price of each area in the ward According to Land prices

in new urban areas, (Attached to the Decision No 30/2019 / QD-UBND dated December 31, 2019 of the Hanoi People's Committee) - Principles of determining land location and land prices:

profitable and has favorable infrastructure conditions than the next locations

are less favorable than position 1

Table 1.1: Land Price List at Tay Ho District (Attached to the Decision No 30/2019 / QD-UBND dated December 31, 2019 of the Hanoi People's Committee)

2 An Duong Vuong

Head of the road

The end of the road 1.25 0.7 0.58 0.51 Head of

the road (outside dike)

The end of the road (outside dike)

1.05 0.60 0.49 0.44

3 Au Co

Head of the road

The end of the road 1.50 0.83 0.68 0.60 Head of

the road (outside dike)

The end of the road (outside dike)

1.40 0.79 0.64 0.57

4 Bui Trang Chuoc Head of

the road

The end of the road 0.95 0.54 0.44 0.39

5 Dang Thai mai Xuan

7 Dong Co Head of

the road

The end of the road 1.08 0.60 0.50 0.44

8 Go to the West

Lake Park

Lac Long Quan Au Co 1.35 0.76 0.62 0.55

9 Hoang Hoa Tham

Mai Xuan Thuong Doc Tam Da 2.50 1.28 1.03 0.90 Doc Tam

Da Duong Buoi 1.95 1.05 0.86 0.76

… ………

Table 1.2: LAND PRICES IN NEW URBAN AREAS, AUCTION AREA, RESETTLEMENT AREA, AND HIGH-TECH PARK (Attached to the Decision

No 30/2019 / QD-UBND dated December 31, 2019 of the People's Committee of

Hanoi City

Unit: USD/m2

Main road Lane Tay Ho District

Main road Lane

Table 1.3: Table of house price comparison between 2014 and 2019

number of floors and the number of rooms are somewhat similar As can be seen, house prices increase about 114,000 USD from 2014 to 2019 Meanwhile, the change of land tax is relatively small, from 1455.25 USD in 2014 to 2038.28 USD

in 2019 As a result, it can be seen clearly that the land value increased significantly while the tax only increased slightly The price set by the state but there is no basis

to evaluate the benefit of the people Thereby, this dissertation try to prove the quantitative relationship of investment in transport infrastructure with the increase

of the value of assets, specifically in housing prices

1.3 Objective of study

Research purposes: The purpose of this study is to calculate the impact of road infrastructure investment on real estate prices in Hanoi City, in particular here

1.4 Scope of study

Hanoi is the capital of the Socialist Republic of Vietnam, with important national influence Hanoi plays a leading role in economic - cultural - political development Therefore, the selection of research in the Hanoi area is a very important and influential thing in this research paper Especially in recent years, the Government has adjusted the development policies to make Hanoi one of the urban developments of international stature Technical and social infrastructure development orientations are also focused in urban development (such as the construction of overhead railways, the expansion of important ring roads, )

Hanoi's administrative boundaries are divided into 12 districts, 1 town, and

17 rural districts 12 districts are include: Ba Dinh, Bac Tu Liem, Cau Giay, Dong

Da, Hai Ba Trung, Ha Dong, Hoan Kiem, Hoang Mai, Long Bien, Nam Tu Lien,

Tay Ho, Thanh Xuan

Figure 1.1: Administrative map of Ha Noi City

The process of collecting data on investment in infrastructure development in the Hanoi city is very difficult Because some key districts of Hanoi have confidentiality policies related to investment in technical infrastructure development, they cannot be supplied to the outside

Therefore, this topic will focus on selecting a district for the study, but the criterion of choosing this district must be that the district is oriented to develop infrastructure planning with many new projects in the period from year 2014-2019

Figure 1.2: The map divides 12 groups of urban districts and choose scope of study

The 12 urban districts of Hanoi are divided into 3 main groups Group 1 is including Hoan Kiem, Dong Da, Ba Dinh, Hai Ba Trung; Districts where no new road constructed Group 2 is Tay Ho, Long Bien, Cau Giay, Thanh Xuan, Hoang Mai; that Districts where many new road construction and road expansion projects

were implemented Group 3 is Bac Tu Liem, Nam Tu Liem, Ha Dong, which‟s:

Districts where many road construction projects were implemented by converting agricultural

In the above groups, this thesis has selected Tay Ho district in group 2 because Tay Ho District are full convergence of factors that need research in Hanoi, especially here is also capable of searching as well as is to collect all the necessary data for this study

Figure 1.3: Boundary of 8 wards of Tay Ho district

Tay Ho is a district located in the heart of Hanoi city, Vietnam

Tay Ho district has a West Lake about 526 hectares, the name of the district is also named after the lake

Tay Ho district is located in the north of the inner city of Hanoi, with geographical location:

- The East borders on Long Bien district with the natural boundary of the Red River

- West: border with Bac Tu Liem district

- The South borders Ba Dinh districts (with the boundary of An Duong residential area, Thanh Nien street and Hoang Hoa Tham street), Cau Giay

- The North borders Dong Anh district with the natural boundary of the Red River

Tay Ho district has 8 affiliated commune-level administrative units, including

8 wards: Buoi, Nhat Tan, Phu Thuong, Quang An, Thuy Khue, Tu Lien, Xuan La, Yen Phu

Tay Ho district is one of the districts with its location and influence characteristics because it is only about 6km from the center of Hanoi, the nearest is about 3km, and the furthest is about 9km The outstanding feature of Tay Ho district

is not only because of its location close to the center, but it also has a very large West Lake, occupying a large area of the district about 200ha

CHAPTER 2

LITERATURE REVIEW 2.1 The relationship between infrastructure investment and real estate

City transportation projects, in particular, tend to signal where the next property hot spot will be Historically this has been road or infrastructure projects but there is increasing evidence to show that investment in mass transport development represents a higher value investment Transportation systems, strong telecommunications systems (including high-speed internet capability) along with reliable and affordable energy are considered fundamental to most real estate developments, whether that be commercial, residential or industrial But the impact

is not always obvious or entirely positive In fact, the influence that infrastructure has on real estate is a complex one

It‟s not just a simple, direct correlation between infrastructure investment and adjacent real estate investment Different types of infrastructure investment have very different impacts in different geographies and on different real estate sectors Their impact and value are also perceived differently in different countries and different sections of society

The biggest challenge for real-estate investor wanting to benefit from infrastructure is timing Any announcement relating to new infrastructure development leads to a hot spot Sometimes this is a highly speculative, short-term market distortion

For some, the value uplift from a transportation project in terms of improving access to business districts, opening up new markets, reducing commute times etc can be negated by the diminished quality of open spaces, the adverse aesthetic or reduced safety conditions Some major infrastructure projects get delayed due to availability of finance, planning approval, public consultations, environmental concerns or changes in governments This can have a significant knock-on effect to the real estate around it

Although we can agree that the impact of infrastructure on real estate investment is mostly positive, it is also unquestionable that the impact is complex Since there is no one-size-fits-all solution it is key to evaluate each real estate investment opportunity individually with a unique business case, all focused on maximizing value Successful infrastructure development is development which boost productivity and provides sustainable economic growth and critical to this is

in the timing and appropriate scale of projects

The impact of infrastructure on real estate is generally easy to read (at least

in hindsight) and for the most part can have positive attributes

However, the impact of infrastructure projects can be complex For example,

in areas where development results in the loss of property values, it is important that investors are adequately informed to make sound decisions To ensure success, investors need to understand the relationship between politics, planning, design, construction, community concerns and finance

Each opportunity must be analyzed on an individual basis using market intelligence along with the latest mapping tools and robust data to help inform the right strategy

Therefore, the relationship between investment in technical infrastructure and real estate is extremely close Because it is not only a transport development investment to solve the congestion, traffic assurance issues, but above all it helps promote economic development in the region Because once the area has a synchronized development of technical infrastructure, real estate investors will want

to invest in it

This leads to the benefit of the people in that area not only in terms of convenient transport infrastructure but also in terms of improved social infrastructure

While it is clear that the development of infrastructure investment has many positive aspects, it also has issues that cause authorities to headache about issues not only in infrastructure investment, but also in the allocation of projections The

project will take steps to formulate and implement the project because it affects the surrounding area year after year from the start of the project

2.2 Overview of related policies in Viet Nam

Infrastructure in general and transport infrastructure in particular are the material foundations that play a particularly important role in the country's socio- economic development Having synchronous and modern transport infrastructure, meeting the demands of transporting goods and passengers, the economy will have conditions for fast, stable and sustainable growth The rapid development of transport infrastructure with the motto of "one step ahead" is an urgent requirement

of practice, both to remove bottlenecks and to facilitate rapid breakthroughs in the process of structural construction synchronous infrastructure of the country

Orientation for synchronous and modern transport infrastructure

development, promoting socio-economic development

Transportation development planning, in recent years, the Party, the State and the whole society have paid great attention to transport development investment; in particular, the transport infrastructure system has had a strong development Transport quality has been increasingly improved, basically meeting the requirements of socio-economic development, ensuring national defense and security, improving people's lives, contributing to hunger elimination and poverty reduction, reducing the distance between regions A number of modern transport works, such as highways, international seaports, international airports, etc., have been invested to build regional and international standards, contributing to creating

a new look for country

The objective of developing Hanoi City's urban infrastructure system to

2020 and 2030

To build a synchronous and modern infrastructure system, creating a foundation for socio-economic development, closely combining with ensuring national defense, security and coping with climate change Mobilize all social resources, create consensus, the support of all classes of people to develop the Capital

To concentrate on investing in synchronous construction of modern framework technical infrastructures and achieve basic criteria on sustainable infrastructure and environment of the civilized capital Strive to 2020, overcome floods and basically reduce traffic congestion in the inner city; to build leading establishments to become a major hi-tech and commercial center of the country in association with national defense and security and environmental protection

To basically complete the construction of a network of centripetal roads, belt roads, urban main axes, developing urban roads and roads in suburban and rural areas Ensure linkage between Hanoi City and development centers in the Capital Region, Northern Key Economic Region, industrial, commercial and urban centers Ratio of 13-15% of urban construction land The rate of land for static traffic will reach 3-4% of urban construction land

Renovating and upgrading national railway lines; to build urban railways, strive to put into use 2 urban railways by 2020 and continue investing in other railways Restricting the use of personal vehicles; develop public passenger transportation by bus, develop some fast bus routes with the rate of travel by public transport reaching 35-45% of the people's travel demand

Building and developing centripetal roads connecting Hanoi City with development centers and industrial centers in the Capital Region and the Northern Delta Development Economic Zone: expanding French highways Van - Cau Gie, Hanoi - Hai Phong expressway, Hanoi - Hoa Binh expressway,

Constructing belt roads: To complete ring roads 2 and 3 and build sections of belt 4 and belt 5 in the city

Building and expanding the main axes of urban transport: East-West axis in the center of the city (RR1), West Thang Long axis, 2.5 axis road, 3.5 axis road, Ton That Tung axis - Player 3 - Player 4 - Xuan Mai,

Building urban transport axes, inter-regional roads and non-urban roads Constructing intersections in the urban center

Improve existing bus routes, improve service quality; develop new bus routes

to bring the total number of bus routes to 98 by 2020; develop bus infrastructure, improve management, accelerate the application of information technology, bus

tickets To build a number of bus stations such as Son Tay, Thanh Tri, Gia Lam and Dong Anh

Building logistics centers in areas of East, West, South and North of the City

Constructing truck stations in areas of Trau Quy, Khuyen Luong and Yen Vien, Building car parks in urban areas, underground and high-rise car parks with modern technology

Seizing the trend of future real estate development, along with taking full advantage of infrastructure advantages, the West Lake area has received the attention of many domestic and foreign corporations According to observation, at the present time, the roads such as Vo Chi Cong, Nguyen Hoang Ton, Lac Long Quan the number of apartment projects, commercial centers, entertainment and schools appear more and more making this place a great construction site, shining lights day and night Many projects have been started and put into operation in the past, which has awakened the real estate potential of this area such as: Cipucha urban area, Star lake urban area, UDIC, Sunshine City, Lotte Mall,

In particular, Nhat Tan Bridge project, Vo Chi Cong route was completed and put into use, creating favorable conditions for connecting to the city center, Noi Bai international airport and Northern provinces In addition, the expansion of the 40m route connecting Nhat Tan bridge and Thang Long bridge, 17.5m road in Phu Thuong ward, expanding Pham Van Dong route into 6 lanes also contributed significantly to the improvement regional transport infrastructure

It can be seen that the situation of technical infrastructure development as well as social infrastructure in Hanoi in general as well as Tay Ho district in particular is gradually developing strongly year by year Especially with the drastic policies of the government as well as the People's Committee of Hanoi, it is also shown that infrastructure contributes to the development not only in the region's economy but also in the region It also contributes to solving the city's urban problems too quickly

Meeting the infrastructure needs of a big city like Hanoi is one of the leading issues today, so in each phase, there are clear public investment policies and plans through each period segment makes the city more and more developed

CHAPTER 3

METHODOLOGY 3.1 Differences-in-differences Methods

One people observer might try to assess the impact of road infrastructure development on residential properties by looking at the prices off nearby properties

thesis based on the main method, the Differences-in-difference method based on the equation:

residential properties prices at the transactional level or at some aggregate level

The key identifying assumption is that without the treatment β would be 0, that is, there would be no difference in the mean prices before and after treatment This assumption is quite strict as one should have strong evidence that nothing else happens meanwhile which could have a systematic effect on the evolution of house prices

The simplest of differences-in-differences (diff-in-diff or DID) design, which to implement a DID estimation one needs data for two groups, specifically two ground residential areas: one in which the intervention or treatment takes places – this is called the treatment ground – and another which is similar to the first group except that there was no intervention there – that is the control group The researcher needs data of these two groups from (at least) two periods: one before

(t=0) and another after the intervention took place (t=1) The basic idea of this

strategy is to compare the changes from period 0 to period 1 in the variable of interest in the two groups In other words, we should calculate the difference between the change in the treatment and the change in the control group:

))

Where:

Table 3.1: Simple differences-in-differences

(program – treatment effect)

Figure 3.1: Graphical of Differences-in-differences explanation

Figure 1 also illustrates the importance of the parallel trend assumption The identification strategy builds on the assumption that without the intervention the prices in the treatment group would have evolved in the same way as in the control group (shown with the dot-dash line on Figure 1) Its basic equation depends on figure 1 and important to define two control group and treatment groups, the treatment group represents the group that has an impact on the value that here is the house price, meanwhile the control group Without any impact, home prices from

2014 to 2019 will increase over time But if there is the effect of a new value, the

the value of the impact

Differences-in-differences in a regression framework (Model 0)

The DID estimation will be implemented using Stata Software The model will be deployed as a regression with time dummy variables and dummy treatment and control group variables That formula is:

Where:

interaction term (which use to indicate who is truly received the effect of new road implementation)

3.2 Hedonic Pricing Methods

Hedonic Pricing Method is used to attempt to evaluate environmental services whose presence directly affects certain housing prices

The most common application of this approach in practice is to the real estate market House prices are directly affected by many factors such as: size, number of rooms, number of floors, distance from home to workplace, distance from home to

new road, market, school, landscape

If the factors other than the landscape are similar, the house price difference

is due to the environmental landscape For example, the presence of open water sources increases house prices, noise from airports can reduce housing prices in areas adjacent to airports In the framework of this thesis, it is assumed that house prices have no negative effects of environmental effects in them

Hedonic Pricing Method is a typical method which use regression estimation

to find property price as a function of the property's attributes (Thrane, 2005)

Where:

)

In chapter 4, We will see how all the participating variables have an impact

on housing prices in this essay in GIS Application, which to create the variable statistics table of house properties

CHAPTER 4

POTENTIAL IMPACTS OF ROAD INFRASTRUCTURE DEVELOPMENT

ON HOUSING PRICES 4.1 Data characteristics

In this analysis, Focus on the construction of new road and house‟s characteristics which‟s effect to housing price Both of these were opened to the public in 2014 and 2019 In this estimation, there are included 567 samples (246 samples in 2014, 321 samples in 2019) in 8 wards to which‟s impact of the construction new road

Data Collections:

My data collection process for new road projects depends on getting government approval as well as input data for 2014-2019 Therefore, data on transport infrastructure and social infrastructure development projects in this period

is completed

The data serve the thesis:

• 5-year medium-term public investment plan for the period from 2014-2019

Follow by 178 /KH-UBND – People‟s Committee of Tay Ho District

Medium-term public investment in 5 years period 2015-2019 in Tay Ho district (3rd amendment)

• Data on the Density population and Density Employment (Department of

Statistic)

There is a total of 50 new road of infrastructure development projects in 8

wards in Tay Ho district, 22 social infrastructure development projects including construction of public area, construction of public facilities

New road construction projects as well as social infrastructure development projects will be one of the parameters to be included in the main study to assess the

In previous chapter 3 in Hedonic Pricing methods, the data characteristics that affect home prices are not only the construction of infrastructure, but also the specific properties of the home

The collection of house price data is mostly done through a real estate private company to get the most accurate data on home price information

For house prices in 2014, 246 samples have been collected, and for 2019,

321 have been collected, of which properties of the house prices are collected including house price characteristics such as area, width, number of floors, number

Table 4.1: Definitions of Potential Variables for Properties Price Functions in

House can be rented out for people

Property Price House per square meters USD/m2 Private real-estate company

Employment density Employment density (people/ha)

(people/

m2)

Hanoi Statistical Office 2014-2019 + Estimation Street density Total street length in buffering area (m/m2) Estimation

Accessibilities

Distance to West Lake Distance to West Lake in Ho Tay m Estimation

Distance to public areas Distance to near public areas m Estimation

Distance to Facilities Distance to near Facilities m

Estimation Distance to main street Distance to near main street m Estimation

Distance to new road Distance to near new road m Estimation

Table 5 show potential variables with their definitions for the estimation of properties price functions First, the housing characteristics consist of 10 variables: business advantages, number of rooms, number of floors, site area, width, Car Accessibility, Elevator, Urban Planning, Properties Price “Business Advantage” is defined to be 1 if the house can be used for business, and 0 otherwise “Number of rooms” and “Number of Floors” is defined as the total rooms and floors of the house “Site Area” is defined as area of land in square meter “Car accessibility” is defined to be 1 If the car is accessible to the house, and 0 otherwise “Width” is the front width of the house in meter “Elevator” is defined to be 1 if house have elevator inside and 0 otherwise “Urban Planning” is defined to be 1 if there is any urban planning project that has all essential services such as supermarkets, amusement parks, landscapes, within a radius of 500m; and 0 otherwise

For the computing of neighborhood and accessibility, a GIS-based database was used produce density, design, distance to road

and destination accessibility “Density” is represented by population density and employment density; “design” consists of street density, “distance to road” is distance from sample to near main road, new road, public area, facilities

Data Analysis:

The main method of application in my thesis is the Difference-in-difference

determine it is necessary to determine the distance of the buffer zone that has an impact on housing prices in 2014-2019

In that assumption, in addition to effects by housing characteristic and neighborhood characteristic, the effect of accessibility plays an important role in housing prices, because the distance from the sample location to accessibility will vary based on the certain way

Based on the Differences-in-differences method used mainly in the thesis, 4 hypotheses are assumed to determine how the buffer zone has impact on house prices This is an important step in determining treatment ground and control group Consider the distance between the sample and the new road project

Case 1: Suppose that impact radius of a new road is 50m Then if the shortest distance from a house to the new road is less than 50m, that house is defined as in treatment group Otherwise, it will be in control group

Case 2: impact radius is 100m

Case 3: impact radius is 200m

Case 4: impact radius is 500m

To determine the distance from the sample to the new road, it is necessary to use the GIS-based coordinate system to determine and calculate In section 4.3, we will detail how to calculate the distance value

4.2 GIS-based database development

The hedonic method uses a quantifiable spatial relationship based on GIS, that attributes are used spatially, and the system is encoded into a GIS-based system The primary tool used for the creation and measurement of each explanatory variable was ERSI ArcGIS 10.8 GIS-based database is created by the writer using the geospatial data sources from Hanoi Urban Subdivision (Zone) Planning, which was developed in 2014 This chapter describes how can use to procedure of GIS- based database development as well as the introduction of housing characteristic, Neighborhood characteristics variables which are measured by using GIS-based database

Steps to implement the process of using GIS-base applications:

Tay Ho district based on the provision of the plan

collected (246 samples in 2014, 321 samples in 2019), development of existing urban infrastructure projects including projects on transport infrastructure and social infrastructure from the Tay Ho district government The Current infrastructure systems and Current land use maps provide the information about street network, number of intersections as well as land-use patterns in Hanoi current built-area

distances around the collected samples and used for estimation calculations.,

Figure 4.1: The boundary network system and existing transportation system of Tay

Ho district

Figure 5 is a data network system that is added to a GIS-based system through the ArcGIS 10.8 application The above data map was converted to standard coordinates WGS 1984 UTM Zone 48N by the national data system issued

by the Tay Ho government based on the Vietnamese national grid format VN2000

Next, the data computation step is added after being added to the data including samples previously collected into the data network Then the parameter calculation step including Neighborhood characteristics and Accessibilities Those computational steps are handled as follows

 Neighborhood characteristics

- Population density (PD)

Due to typical characteristics in 2014 and 2019, there is a different population that changes each year, but there is a difference in population density Especially, the population of each ward has changed from year to year, below is the table of population statistics of each ward in Tay Ho district from 2014 to 2019

Figure 4.2: Population of each ward over the years 2014-2019

Calculation the population density of 2014 and 2019, the effect on each sample of each year must be based on the following formula:

(R=50m,100m,200m,500m) for the individual n (samples); represents the

Tứ Liên Ward

Quảng An Ward

Xuân LaWard

Yên Phụ Ward

Bưởi Ward Thụy Khuê

Ward Year 2014 Year 2015 Year 2016 Year 2017 Year 2018 Year 2019

average population density in a ward k; and is the area of the buffer zone (R) for the individual n

- Employment density (ED)

Data about employment density in Tay Ho District, which is provided by Hanoi Statistical Office 2014-2019 This data is data that includes job loss data at private and public companies at the ward level Accordingly, employment density is calculated by the formula for population density, according to the following formula:

(R=50m,100m,200m,500m) for the individual n (samples); represents

zone (R) for the individual n

= 50m, 100m, 200m, 500m), 𝑅 is the area of the buffering zone (R) for the

individual n

 Accessibility

After input data is input into the GIS-based, it will calculate the distance from the model to the main road, new road, facilities, public area The distance calculation values will be calculated according to the normal from the sample to the road The distance value will be meter

Figure 4.3: Location of sample in 2014-2019 by GIS-base

After having all the computational data used in GIS-based via ArcGIS 10.8,

it will be used as the result of the next steps Chapter 5 will be a chapter to provide calculation results to reach the result

CHAPTER 5

MODELS 5.1 Baseline Model

Initially, focus on two time periods, 2014 and 2019, in table 5, shows the descriptive statistics of potential explanatory variables used in properties price functions in 2014 and 2019

First, it shows that average “Business Advantage – Stores and Apartment” in 2014 is 0.28 and 0.02 This means that 72% and 98% of properties are located along alleys, which may not have advantage in business But at this number of years 2019 is 0.32 and 0.05, which is means that 73% and 95% not have advantage in business It can be seen that 2019 there is a higher proportion of homes that are serviceable than in 2014 The number of Business Advantage has increased significantly over the past 5 years, especially the rental apartment business This is the type where the owner benefits from the road widening

Mini-Third, an average “Car Accessibility” in 2014 and 2019 is 0.28 and 0.48, which means the number of accessible homes with cars in 2019 is greater than in

2014 Car Accessibilities is one of the most important points because it greatly increases the value of the house It can be seen that 2019, the amount of road that can be used will increase

Fourth, “Width” variables an average in 2014 is 4.625m, which is less than

2019 is 5.11m

reviewing the change of the data removed the values of low-life houses as well as temporary houses and land sales data that were not considered here

Sixth, “Elevator” in 2014 and 2019 is 0.134 and 0.17 The number of homes with elevators in 2019 is higher than in 2014 The number of homes using elevators for many purposes but can be seen to increase significantly because small apartments are already in use

Seventh, “Number building of Room” have rooms from 2 to 9 rooms in 2014 and from 3 to 18 rooms in 2019 Which mean in 2019, there are more houses used for the purpose of making mini apartments than in 2014

Eighth, “Number building of Floors” have floors from 2 to 6 floors in 2014 and from 2 to 10 floors in 2019 It can be seen that 2019, the height of the house has been significantly raised when the average height in 2014 is 3.4 and in 2019 is 4.3 For use as an apartment business, it can be seen that average height limit of 2 years has a significant change

Ninth, the impact of urban planning projects in 2019 has a bigger impact than in 2014 when it can be seen 34,6% in 2014 and 36% in 2019 Social facilities from the planning areas have changed because in 5 years major planning projects developed

Eleventh, an average “population density” and an average “employment density” measured in a buffer zone of 50m are 822.07 people and 244.72 employment per square kilometers, which‟s buffer zone radius of 100m increased about 826.68 people and 245.66 employment per square kilometers in 2014 Basically, it can be seen that is no significant change in population and workers in each buffer zone in 2014 and 2019 In 2019, the population density and the working population have a significant increase.

within a radius of less than 200m is gradually increasing, while at a radius of 500m,

Twenty, an average “Distance to Facilities” is 307,69 m in 2014 and 341.53

m in 2019 The value of distance to facilities shows that construction projects in

2019 have total road distances greater than 2014

“Distance to West Lake” and “Distance to Main Road”, which can be seen that samples collected in 2019 tend to be close to main road areas and near west lake An average “Distance to New Road” is 32.53m in 2014 and 29.95 in 2019 It

can be seen that value of the samples near the new road in 2019 are sold at a closer distance than in 2014

Finally, House prices for 2014 and 2019 are based on house prices announced by individual real estate companies' house prices by house prices in VND- Vietnam Dong House prices will be converted to USD-dollars in this essay Since the USD rate between 2014 and 2019 has a year-on-year depreciation, it will have to convert the inflation rate to a USD price for a given year to have the same USD benchmark to compare between the two times Therefore, house prices in

2014 will be converted according to the exchange rate in 2019 to the same price level.

Table 5.1: Descriptive statistics of variables used in property price functions in 2014 and 2019

2014 2019 2014 2019 2014 2019 2014 2019 2014 2019

Housing characteristics

1 Business advantage - Stores BA-S Dummy 0.28 0.32 0 0 1 1 0 0 0.45 0.45

2 Business advantage - Mini

Apartment

BA-MA Dummy 0.02 0.05 0 0 1 1 0 0 0.14 0.22

3 Car Accessibility Car Dummy 0.28 0.48 0 0 1 1 0 0 0.45 0.5

4 Width Width m Continuous 4.625 5.11 2.4 2.27 14 21 4.05 4.2 1.74 2.65

5 Site Area Area m2 Continuous 57.176 74.99 15 20 240 387 45 57 36.06 53.79

6 Elevator Elevator Dummy 0.134 0.17 0 0 1 1 0 0 0.34 0.38

7 Number of building Room Room Room Continuous 3.549 4.99 2 3 9 18 3 4 1.66 2.91

8 Number of building floor Floor Floor Continuous 3.49 4.2 2 2 6 10 3.5 4 1.09 1.36

9 Urban Planning Project U_Plan Dummy 0.346 0.35 0 0 1 1 0 0 0.48 0.48

10 Properties Price PP USD/m2 Continuous 4469.91 6416.79 1108.11 1333.33 16682.11 36601.31 3990.96 4444.44 2455.6 4113.17

Neighborhood Characteristics

11 Population density_50m PD_50 people/km2 Continuous 822.07 852.63 296.5 270.32 1999.83 1789.26 581.89 640.26 589.36 520.32

12 Population density_100m PD_100 people/km2 Continuous 826.68 853.2 296.5 270.32 1999.83 1789.26 581.89 670.9 587.42 517.24

13 Population density_200m PD_200 people/km2 Continuous 824.95 858.84 296.5 270.32 1999.83 1789.26 581.89 720.12 576.45 511.3

14 Population density_500m PD_500 people/km2 Continuous 820.37 854.54 296.5 270.32 1999.83 1789.26 586.54 720.12 547.41 492.07

15 Employment Desity_50m ED_50 people/km2 Continuous 244.72 351.48 84.16 158.76 589.92 798.83 187.77 277.92 158.41 202.86

16 Employment Desity_100m ED_100 people/km2 Continuous 245.66 352.29 84.16 158.76 589.92 798.83 187.77 301.55 157.78 202.94

17 Employment Desity_200m ED_200 people/km2 Continuous 245.8 354.35 84.16 158.76 589.92 798.83 187.77 305.2 154.72 202.8

18 Employment Desity_500m ED_500 people/km2 Continuous 248.2 354.95 84.16 111.14 589.92 798.83 187.86 264.22 144.24 197.9

19 Street Density (buffer 50m) SD_50 m/m2 Continuous 0.062 0.07 0 0 0.288 0.29 0.053 0.06 0.055 0.06

20 Street Density (buffer 100m) SD_100 m/m2 Continuous 0.071 0.09 0 0 0.333 0.32 0.056 0.07 0.055 0.07

21 Street Density (buffer 200m) SD_200 m/m2 Continuous 0.081 0.097 0 0 0.315 0.38 0.069 0.08 0.056 0.07

22 Street Density (buffer 500m) SD_500 m/m2 Continuous 0.061 0.071 0 0 0.128 0.15 0.053 0.07 0.031 0.03

Accessibilities

23 Distance to Facilities D_Fa m Continuous 307.69 341.53 5.42 1.39 1421.93 1329.59 248.23 265.27 226.56 269.5

24 Distance to West Lake D_WL m Continuous 501.21 508.71 6.17 0.21 2740.28 2649.71 316.99 325.95 523.93 527.93

25 Distance to Main Streets D_MR m Continuous 32.53 29.95 0.16 0.25 248.66 235.82 25.1 22.82 31.46 31.67

26 Distance to New Road D_NR m Continuous 293.79 176.7 4.14 2.96 1605.44 966.94 191.51 129.29 319.2 163.67

27 Distance to Public Areas D_PA m Continuous 326.57 362.76 18.63 9.68 1546.27 1556.53 267.74 285.17 243.7 293.75