How Public Transport Actually Turns A Profit In Hong Kong

[M II A II R II K]

How Public Transport Actually Turns A Profit In Hong Kong


19 Mar 2019

By Matthew Keegan

Read More: https://www.theguardian.com/cities/2...t-in-hong-kong

“Once we build the railway, the value of land rises and we capture the increase in value,” says Jacob Kam, managing director and soon-to-be chief executive, of Hong Kong’s Mass Transit Railway (MTR) Corporation. This “rail plus property” model allows Hong Kong’s public transport company to be self-financing.

- The MTR makes just as much profit above ground, from property developments, as it does from rail operations, making it one of the most profitable metro operators in the world. At a time when rail services in cities globally continue to draw the ire of passengers for disruptions, delays and fare increases, the MTR manages an almost perfect 99.9% on-time rate while carrying an average of 5.8 million passengers daily.

- Karol Zemek, editor of Metro Report International, sounds a note of caution. “It is worth remembering that the metro in Hong Kong is much younger than those in London and New York,” he says. “A lot of problems, especially in New York at the moment, come from ageing infrastructure. Parts of the London and New York networks are among the oldest examples of metros in the world.”

- The MTR’s model is made possible by the Hong Kong government. The government gives us the land and development rights for the greenfield price – the price of the land before the railway is built. — The model sees the MTR construct the new rail line and tender for private developers to build residential and commercial properties above its stations, then take a share of the resulting sale or rental income.

- Revenues from developments along MTR’s Tseung Kwan O line, opened in 2002, financed the extension of that line to serve a new town that has since grown to a population of 380,000. Crucially, the model also spares the MTR from having to compete with every other public agency for state funding, allowing it to be self-sustaining and implement rail projects relatively quickly. Since the MTR’s first “rail plus property” development in 1980, the model has been expanded extensively throughout the city.

- In addition to being a successful source of income, the model improves the city’s urban development. — The result is what are often high-quality living environments with seamless transport connections. The Kowloon Station development has at least six uses of land: rail, a bus interchange, retail, residential, hotels and offices. — Using the transport network, especially the railway network, they can increase the intensity of development, making land use in cities much more efficient.

- The MTR’s property development model has come under fire for building private instead of public housing to maximise profits. Critics say contracts to build property over stations should be open to tender and not just given to the MTR. — While the ‘rail plus property’ model is somewhat positive for financial sufficiency and urban modernisation, we must admit that there are ongoing issues of housing affordability and income disparity around stations.

- Hong Kong’s former transport and housing minister Anthony Cheung Bing-leung last year urged the government not to grant MTR property development rights at new stations. He feels the MTR’s construction of only private housing makes it difficult to meet public housing targets. — A number of new schemes the MTR is discussing could involve the government assigning 30% of new residential properties to public housing, with 70% private.

- If cities want a sustainable railway, they will need to resolve the loss-making issues that plague so many of them. — Each country has a different land policy, so they might not be able to implement ‘rail plus property’ in the same way that we do in Hong Kong, but they are thinking about a very similar approach. We believe there are possibilities in Australia, Sweden and the UK.

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[muertecaza]

Originally Posted by M II A II R II K

How Public Transport Actually Turns A Profit In Hong Kong


19 Mar 2019

By Matthew Keegan

Read More: https://www.theguardian.com/cities/2...t-in-hong-kong

Interesting article. I know that the Phoenix light rail has a few large surface lots it uses as "park and rides" that are under-utilized because they are at former end-of-the-line stops that are no longer end-of-the-line because of extensions. I'm not sure what legal/regulatory changes would be necessary (if any) to allow Valley Metro (the local transit authority) to lease those properties as a revenue source, but I would love to see someone try. I know the park and ride in Mesa has an (unlikely to be built) proposal, but I don't recall the proposal providing for an ongoing income stream.

There is a local analogue--Arizona State University has been aggressively developing and leasing its land for about the last 10 years to develop a revenue source that is not dependent on state funding (a lesson learned after massive budget cuts in the recession). This has drawn the ire of some fiscal hawk state politicians, and I imagine it would be doubly so for public transit. But still would love to see someone try.

[bobdreamz]

Florida's Brightline / Virgin trains are similar to Hong Kong's MTR concept with the difference being it is privately owned.