The MTR Corporation could be asked to surrender the right to develop property on top of stations should it fail to roll out projects in a more orderly manner in the next two to three years.
The warning by Secretary for Development Paul Chan Mo-po yesterday came just days after he expressed dissatisfaction with the railway company for not doing enough to help the government ease the housing shortage.
In a TVB interview yesterday, Chan also said the government was negotiating with the corporation over the fate of a site in Tin Shui Wai that the MTR Corp had planned for private housing. The government wants to reclaim it for public housing development, after two failed attempts by the company to find a contractor.
He declined to discuss what options were being considered for the site, but did reject suggestions put forward by some critics that the government should offer the MTR Corp another site elsewhere for developing property.
Speaking after the TVB interview, Chan said: "We are talking with the MTR Corp with the aim of enabling its property projects to be rolled out in a more orderly way in coming years. We understand that is also its objective. Both of us are working hard together [towards that aim]."
Asked if the government would consider taking back property development rights from the railway company, Chan said he would not comment at this stage but added: "I can tell you that we have done many studies and preparatory work [on this issue]." He said it involved very complicated legal issues.
A corporation spokesman said the so-called railway-property model had worked effectively for decades and provided tens of thousands of homes.
It is government policy to grant the MTR Corp the right to develop property atop stations as a means to subsidise its rail development projects, which involve huge capital investment and are not always financially viable.
One example of an MTR property project in recent years is Lohas Park, at Lohas Park station.
Last week, Chan said the railway company had not been doing enough to help solve the city's housing shortage, and asked the MTR Corp to "try harder". Such criticism was seen as unusual, given the government is a major shareholder in the company.
The MTR Corp has not launched a single project in the past three years, with its projects often receiving a tepid response at tender.
The latest failure saw the corporation withdraw in January a project at Tin Wing light rail station in Tin Shui Wai, saying all three bids it received failed to satisfy the financial requirements.
It was the corporation's second attempt to put the project out to tender.