MTR Corporation (Hong Kong)

Overview

The MTR Corporation (MTRC) operates Hong Kong's metro system and is the world's most-cited example of financing public transit directly from the land value capture it creates. Under its "Rail plus Property" (R+P) model, the Hong Kong government grants MTRC development rights over land at and above new stations and depots, for which MTRC pays a land premium based on the pre-railway value of that land. MTRC then partners with private developers to build housing and commercial space on the sites, and shares in the resulting development profits.[1] Because a new rail line raises the value of adjoining land, capturing part of that uplift lets the railway fund its own construction rather than relying on fares or government subsidy alone; property-related income has supplied more than half of MTRC's total revenue.[1]

The model depends on an institutional arrangement in which a single, partly government-owned corporation controls both the transit system and the development rights over the land its lines make more valuable — a combination few other transit agencies have.[1] Hong Kong's wider land system, in which nearly all land is government-owned and leased rather than sold freehold, is what makes granting MTRC these development rights administratively straightforward (see Hong Kong).

See Also

• Land Value Capture — the general mechanism MTR exemplifies
• Hong Kong — the leasehold land system that enables the R+P model
• Public Land Leasing — the underlying land-tenure arrangement
• Betterment Levy — a related, tax-based way of capturing infrastructure-driven land value

Sources

1. Ryan-Collins, Lloyd & Macfarlane, Rethinking the Economics of Land and Housing (2017), Ch. 7, Box 7.1 — used for the Rail + Property model as a land-value-capture case study. Book page
2. Jauregui-Fung, F., "The Case of Hong Kong Rail + Property Model," German Institute of Development and Sustainability (IDOS) — used for the mechanics of development-rights allocation, the land premium, and the share of MTRC revenue from property. PDF · archived