Regional Institutional Capacity as a Potential Mediator of Infrastructure Capitalization: A Conceptual and Geospatial Framework

Major infrastructure investments alter accessibility and urban development patterns, yet their impact on housing prices varies significantly across regions. The prevailing interpretation attributes this heterogeneity to supply differences or regulatory constraints, treating land use regulations as exogenous variables. Nevertheless, even two regions with a nominally similar regulatory framework may produce substantially different outcomes in the housing market, depending on the effectiveness of rule implementation. This paper argues that this approach overlooks a critical variable: the ability of regional authorities to coordinate, regulate, permit, and implement spatial development in a predictable and timely manner. In line with this, a conceptual framework is developed, grounded in the literature on spatial and multi-level governance, in which regional institutional capacity is proposed as a potential mediator of capitalization around project milestones (announcement, funding, construction, operation), rather than as a backdrop. This capacity shapes outcomes through three interrelated dimensions: the responsiveness of supply, which depends on administrative capacity and regulatory consistency; the coherence of governance across jurisdictions within functional urban areas; and the management of land value through land value capture instruments. From this framework, testable propositions are derived regarding the intensity, timing, and spatial distribution of price effects. The study does not empirically estimate changes in housing prices, nor does it test the propositions put forward. Instead, it develops the conceptual framework and organizes the spatial and institutional units of observation required for a subsequent empirical test. The framework is specified spatially through Section A, Line 4 of the Athens Metro to organize the project’s spatial units, administrative jurisdictions, land uses, and milestones for future analysis. The contribution is threefold: conceptual, as it elevates regional institutional capacity from a contextual to an explanatory variable; theoretical, in that it bridges urban economics with the governance literature; and policy-relevant, since it repositions the reform of regional governance as a constituent element of housing policy and as a factor that may shape sustainable spatial development outcomes.