From:
http://www.economist.com/news/britai...s-commute-loop

London Overground

*In the loop*

WHEN Transport for London (TfL), the authority behind the city’s roads and
Tube network, took over what is now known as the London Overground in 2007
it was in a sorry state. The route, which incorporated several rail lines,
was overcrowded, with neglected stations and rickety trains. How the line
was transformed illustrates some of the ways that infrastructure projects
can alter a city.

Since it opened in 2010—with extensions in 2011 and 2012—the London
Overground changed two things. First, the way that commuters get around the
capital has shifted. In 2008, 33m passengers zipped up and down the
service. Last year 120m did. Fully 64% of those who use the network are
getting to and from work. This initially lightened heavily congested trains
on the Southern service (another line running along the route) with 46% of
new passengers swapping from other train services.

Passengers started to take the train instead of buses or crowded
underground carriages. Stations with an interchange, such as Highbury &
Islington in the north-east and Canada Water in the south-east, became more
important. Each weekday around 60,000 people travel to and from Highbury &
Islington on Overground services. By the end of 2011 total peak passenger
volumes had increased by a third on the east London route.

Second, areas that were once underdeveloped became more popular. According
to Savills, an estate agent, between 2007 and 2012 the average value of
property sold in Haggerston, a stop in one of the poorer areas of Hackney,
jumped by 34% (the average value of property sold in London as a whole
increased by 25%). Some of this is down to more people buying houses rather
than flats. But better connections helped too. In Peckham Rye, another stop
on the service in the south-east, average values went up by 24%. In New
Cross, also in the south-east, the average value of property sold increased
by 12%. Many buyers are young professional families, says Abdallah Osman of
Winkworth, another estate agent. By contrast, average property values in
Highgate, a leafy suburb in north London fell by 8%, while those in Muswell
Hill, also in the north, fell by 3%.

As prices go up across London, younger families and rich professionals are
pushed farther east. These areas were also boosted by the introduction of
the Jubilee line extension in 1999 and the Victoria line upgrade in 2011.
Such new connections opened up the terrain to young professionals, helping
gentrification—already well-advanced in places such as Shoreditch by
2007—to spread farther east and south.

But the continuing success of the Overground will not come smoothly. TfL
predicts that several parts of the line will be crammed with commuters by
2016. Trains and platforms may have to be extended. Squeezed buses and
Tubes in the East End have not seen the decline of 6m passengers originally
predicted. New passengers have simply taken the place of those who have
swapped to the Overground.

Despite this, the model of the Overground looks likely to catch on. Unlike
other rail services in Britain the line is run on a concession service,
rather than under a complex franchise structure. This means TfL taking some
of the financial risk of running the line, giving them an incentive to make
sure it works well. Already TfL has announced that it will take over the
West Anglia route under a similar concession scheme, running commuter
trains from Liverpool Street from 2015. Other routes—such as the
Southeastern—could follow. Homeowners, as well as trainspotters, will be
watching out.