I refer to your letter entitled “Unfair Rail plus Property Model for MRT Development” dated August 8m 2011. YBhg Tan Sri has raised some concerns regarding the rail and property model including the acquisition of the Jalan Sultan shoplots.
The “rail and property model” is a business model that has been successfully applied by the Hong Kong MTR Corporation in developing the HK MRT rail network. The rationale behind this concept is to ensure effective synergies between rail and property development to optimise catchment and passenger flows for the MRT and provide an effective means of recouping the vast sums spent on developing the MRT. For Hong Kong, this approach also serves as a planning tool for urban spatial development by establishing new communities along the routes of its railway lines.
HK MTR revenues are currently based on 35 per cent fare box revenues, with the remainder being derived from property development. By relying solely on fare box revenue itself, Hong Kong will not be able to successfully finance both the capex and opex costs for its rail network.
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