MASS Transit Railway Corp (MTRC) and New World Development will jointly redevelop the railway's headquarters site and depot at Telford Gardens in Kowloon Bay for $2 billion.
The joint venture partners propose to replace the existing seven-storey headquarters building with two 16-storey office towers and a four-storey shopping arcade and 200-space car park.
This will be tied to a road improvement scheme to alleviate the serious traffic congestion problems dogging the Telford Gardens roundabout.
The roundabout and interchange originally had been built to cater for the adjacent housing estates.
Today it is one of the busiest junctions in East Kowloon, handling heavy business and industrial traffic that has emerged with the commercial expansion of the Kwun Tong and Kowloon Bay areas.
The MTRC said the urgent need to expand the roundabout was one of the prime reasons behind the redevelopment plan.
The MTRC said the more than $2 billion to be invested included the cost of road improvements.