Hedonic estimates of the underground tunnels of 'Mittlerer Ring'

'Mittlerer Ring' is an intermediate ring road in Munich. It was constructed for the 1972 Olympics, and its total length is 28 km. Construction of the underground tunnels was implemented for Mittlerer Ring in the 1980s to improve the habitational environment. This study reviews the effect of the underground tunnels of Mittlerer Ring. First, the change of land prices along Mittlerer Ring and in the Munich area from 1980 to 2010 is observed. Then, by creating a land price function for every 10 years from 1980 to 2010, the change in the effect of the tunnels is examined, and the benefits of the tunnels are estimated. As a result, land prices along Mittlerer Ring were found to be much lower than that in other areas in 1980. Then, the tunnel construction in the 2000s caused prices along Mittlerer Ring in 2010 to match those of similar areas. Thus, tunnel construction may increase land price not only along streets with tunnels but also along the entire Mittlerer Ring. By building a land price model every 10 years from 1980 to 2010, the change of the effect of the tunnels was found and the benefit of the tunnels was estimated. The estimation results of the benefits suggested that an underground tunnel benefitted not only nearby areas but also the surrounding areas. Moreover, it was found that the benefit would cover construction costs within several years. (C) 2014 The Authors. Published by Elsevier B.V.