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Jake's View
PUBLISHED : Tuesday, 06 August, 2013, 12:00am
UPDATED : Tuesday, 06 August, 2013, 4:48am

MTR's rail-property development model not for all

Transport firm's way of building metro network good for HK at a time it was undergoing rapid growth and not to already developed areas now

BIO

Jake van der Kamp is a native of the Netherlands, a Canadian citizen, and a longtime Hong Kong resident. He started as a South China Morning Post business reporter in 1978, soon made a career change to investment analyst and returned to the newspaper in 1998 as a financial columnist.
 

MTR wants more overseas projects, especially on the mainland, where it is promoting its rail and property model as a solution to debt-laden railway businesses.

SCMP, August 3

 

So who can fault me for saying that MTRC stands for Modern Town Redevelopment Company when our metro system's finance man, Lincoln Leong, himself pushes this line?

You have to expect it. Every time the MTR finishes a new project, with ribbon-cutting speeches made and the champagne drunk, the boys all clap each other on the back and say: "Wow, that was fun. Let's do it again."

But there is no immediate prospect of doing it again once the South Island line is finished. Only short spur lines in already built-up areas are left on the plans, along with lines that the company will operate but is not building. Tut, tut, tut, how sad, all that rail and property model experience going to waste.

It is just as well. The rail and property model was never anything but a delusion to which only Hong Kong bureaucrats could be subject. It traded on the odd notion that you cannot assign a value to property until you actually dispose of it.

Thus if you give the MTR the land above its stations, these sites suddenly and magically acquire value and the proceeds cover the cost of building the railway lines. Ain't magic wonderful? We got the MTR for free.

Did it ever occur to our mandarins that development land is the most valuable treasure in our public purse and that they might raise even more money if they sold these sites at auction? To my mind, there never was one of those "win-win situations" of which they talk so much, but just a convoluted way of doing things when a simpler way would have done.

It got even sillier at times. When Donald de Bowtied, as financial secretary, decided to float the MTR on the stock market, he said he could value it at HK$100 billion because that was how much had gone into building the network at the time.

The investment bankers soon told him otherwise. The fares had been set so low that profits would allow a valuation of only HK$25 billion at best. Donald's solution: Take a big piece of reclaimed mud at Yau Ma Tei, lift all building restrictions, and pass it on to Sun Hung Kai Properties as an MTR joint venture.

Donald swiftly got his HK$100 billion and we got that grim fortress ring of blocks, which so darkly overhangs what is now to be the West Kowloon Cultural Centre. Saved face trumps sound finance.

The rail-property model has other faults. It inevitably favours rail construction above new development areas, where there is plenty of available land and none quite so valuable as right over the rail station that provides the primary transport link.

But it is not quite so suited to already densely developed areas that, in other cities, may be most in need of a metro system. It also distinctly disfavours the creation of hubs. The first rail line to the hub gets the station land and the builders of the next line then argue for another hub for themselves.

Put another way, the rail-property model sufficed for a high-growth period of Hong Kong's history, while this city was expanding rapidly. These conditions may not obtain in the future and they certainly do not obtain in many cities to which the MTR may want to apply them. This is a Hong Kong model. It does not necessarily ship well.

Most of all, I can picture the raised eyebrows of city officials on the mainland who are first told by Mr Leong that he has a cost-free way of building them a metro and then tells them what it involves.

Does he really expect them to be ignorant of the commercial value of their prime inner city developments sites? Does he really think them so backward that, as he claims: "On the mainland, most of the space above railway stations and depots is empty because it is not easy to put up a building without expertise and know-how."

I rather think that this sort of condescension will cost him dear.

jake.vanderkamp@scmp.com

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impala
[Did it ever occur to our mandarins that development land is the most valuable treasure in our public purse and that they might raise even more money if they sold these sites at auction?]

Perhaps it occurred to our 'mandarins' that city planning and management is not an exercise in profit maximisation, even if it is for the public purse. Perhaps it occurred to them what hasn't occurred to Mr van der Kamp: that having good, efficient and affordable public transport is an enormous benefit to all of society.

Also, Mr van der Kamp is talking as if the MTR is proposing to export this model to inner-city, densely populated, late-stage urbanisation areas like New York, or Paris. We are talking about the mainland here, which is barely 50% urbanised and where we will see, one way or another, still a huge growth in urban areas over the coming decades. The MTR model can work very well there, just like it did in Hong Kong.
daniel18
It is this shxt attitude that mainlander official holds that sickens Hkers! I do think HK MTRC just need to walk away simply with holding arms! Mainlander needs not to copy hk! Mainlander metro train has their own style! As there are discrepanies between hk and mainland in railway system, hk MTR should step back! They do not need to be taught by hk!
Giwaffe
If you are referring to Elements/Union Square, it seems rather well designed. Courtyard style blocks are arguably one of the better approaches to urban planning and land utilization.
oasis
Elements / Union Square price levels would not have been what they are w/o De Bowtie & his investment immigration scheme for mainlanders. A lot of money was put to work & it required a bailout at the time. No discussion was made regarding whether HKer's as a whole have been made better off because of this though.
 
 
 
 
 

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