Supporters of Kowloon-Canton Railway Corp (KCRC) like to point to Sun Hung Kai Property's Royal Ascot development in Sha Tin as the classic example of how an otherwise far-flung property project can benefit from being strategically located along a transport artery such as the KCR network. Since its launch just over a year ago, flats in Royal Ascot at the KCR station in Fotan have consistently sold for more per square foot than comparable projects in the area. At last count, the developer was charging about $6,000 per sq ft and has netted billions of dollars in revenues from sales. To say that the Royal Ascot is something of a cash cow for Sun Hung Kai would not be an exaggeration. However, analysts are guarded about the impact of the Western Corridor Railway, or West Rail, project on property values in affected areas in the New Territories such as Yuen Long and Tuen Mun. While they say that property prices in Hong Kong's 'ghost towns' will probably increase, this is likely to happen at a snail's pace. They also have doubts about whether or not developers will become involved in any sort of buying frenzy involving land along the proposed rail line. Not surprisingly, this view is not totally shared by KCRC officials who say that history shows property prices have traditionally benefited from its infrastructural projects. Supporters of the West Rail project, which is not expected to be completed before 2001, say that large increases in property prices could come to such far-flung areas as Yuen Long and Tuen Mun once this new line is built. Residential prices in both places have hovered at the $2,000 per square foot mark for a long time. They contend that property prices will jump because the new transport link would provide quick and easy access for residents living in Yuen Long and commuting to Central. It would also help cut down traffic volumes along the Tuen Mun Highway, making it a much speedier and accessible transport option. While no sort of property boom is in evidence at the moment, there is some suggestion that developers are selling certain projects in the New Territories at prices based on the assumption that the line has been built or that construction is imminent. Analysts point out that the anticipated line will not create a buying frenzy in the property market. They say that developers have been purchasing and accumulating land for development for many years and that they would rather sit and wait for the right time to build or redevelop. Sun Hung Kai and Cheung Kong (Holdings) are the big developers with the greatest stakes in the remote areas. While KCRC officials have a rough idea how much land they would need, they do not know who actually owns it. A couple of KCRC officials recently said that they had no way of ascertaining who owns what land because much of it has been purchased by shell companies. Any jump in property prices would hinge on construction of West Rail beginning as soon as possible, but that is looking increasingly unlikely. While KCRC officials publicly say that they would like to start construction sooner than later, there are a number of impediments to progress. The timetable for construction appears mired in political debate, which can spell disaster or at least long delays. At the same time, there is some concern among pundits about whether developers will have much of an appetite for any of the 10 proposed commercial-residential developments along the route once the project gets the go-ahead. The projects will be built on future stations along the line, from Tuen Mun, Yuen Long to Kam Tin, Tsuen Wan, Yen Chow Street and West Kowloon passenger terminal. KCRC officials are optimistic that developers will be keen to get involved in the projects because most of the tendering will actually take place after the line is completed. In any event, most of the tendering for the airport railway would have been completed, giving developers the opportunity to turn their attention to the KCRC project. 'The developers would like to expand their activities and we would see us as the next batch', is how Ian McPherson, director of the West Rail project, put it. In fact, he seemed to think that it 'could be some time before we see any residential development'. Some analysts contend that the project may be delayed because the Government has a preference for the construction of a subway line to Tseung Kwan O or Junk Bay. They contend that this might make financing a problem. However, Mr McPherson disagrees. He seems confident that the banks will treat the MTRC as one entity and the KCRC as another. 'Hong Kong has a big appetite for funding,' he said. Whether or not the new KCRC rail link will do to property prices what the KCRC line did for Sun Hung Kai's Royal Ascot is anybody's guess. But some analysts are convinced that if developers want to recoup the same kind of prices, they would be better off putting a race track near the development. That, as everybody knows, is the real reason why Royal Ascot can fetch the prices it is charging.
