Public Private Partnership in Railway. -A success story in Hong Kong-

Transcription

1 Public Private Partnership in Railway -A success story in Hong Kong- Yam Pak Nin Deputy General Manager International Business MTR Corporation Ltd 2007/12/11 Page 1 Company Background Established in 1975 Operates on prudent commercial principles Listed in the Hong Kong Stock Exchange - October 2000 Main businesses include: Financing and construction of railway lines Operation of the MTR network Non-fare revenue generation Property development and estate management 1

2 The MTR Network Asset value: US$ 15.4 billion 91 km in total 53 stations, 5 depots, cars Average daily patronage 2.5 million Funding Gap Profit Cost of Debt Asset Replacement Funding Gap Other Revenue Operation & Maintenance Cost Fare Revenue Initial Capital Cost Cost Revenue 2

3 Principal elements of the rail + property business model: PODIUM Government sells land exclusively to MTR 5/F (PARK & RIDE, RESIDENTIAL C/P) Superb planning, management and control to maximize the synergy between railway station and property 4/F (RESIDENTIAL C/P) 3/F (AEL& TCL PLATFORM AND SHOPPING MALL) High-quality real estate, which integrates well the railway stations at appropriate locations in HK Enhancement of life standard in Hong Kong PTI STATION SHOPPING MALL RESIDENTIAL OPEN SPACE 2/F (AEL & TCL PLATFORM AND SHOPPING MALL) 1/F (STATION CONCOURCE, SHOPPING MALL & PTI) G/F (L/UL BAY, SHOPPING MALL, PTI AND C/P) MTRC as Development Agent Government Site Development Market Players Policy Bureaus Plan. D TD Lands. D EPD Others MTRC Railways Stations Developer A Developer B Developer C Developer D 3

4 Integrated Property Development MTR leads and coordinates the development processes including: Preparing the development master plan and phasing Resolving all interfaces with the railway Tendering of the land parcels Liaise between different developers Monitoring the quality of the developments Win-Win-Win Situation for all parties involved GOVERNMENT Financial benefits Property Finance construction & improve ridership SYNERGY of RAIL + PROPERTY Improve accessibility & land value Railway Sustainable urban living & enhanced quality of life SOCIETY & ECONOMY 4

5 Integrated Property Development The provision of the railway greatly enhances development potential along the alignment Proper integration with the railway maximise the development potential and land value Profits generated helps to fund the railway construction cost Property Development Vertical Integration Property Development Retail Link bridge Transport Interchange Station 5

6 Property Development Horizontal Integration Property Development Property Development Station Link bridge Highway/Open Space Property Development Depot Podium 6

7 This leads to following benefits: 1. Government gains money from land premium, and doesn t need to subsidize the railway system 2. Land value around stations will improve (through property development) ->MTR uses this to finance construction of railway system 3. Intensification of property development around the railway stations will improve the number of people traveling 4. Better quality of life (less traffic, less pollution, better convenience, time saving) through use of railways Who are the winners in this model? 1. Government Wins No direct financing needed for railway construction World class metro system at no cost to Government or tax payers Good rate of return achieved without need for any direct financing Financial benefits from land premium received from developers 7

8 Who are the winners in this model? 2. Developers Win Access to complicated sites above railway stations location, location, location Technical complexities of constructing above railway station resolved with enabling works built by the Corporation in advance Shorter development period as foundation works have already been built Who are the winners in this model? 3. The Corporation Wins We use property profits to finance railway construction no need to rely on Government subsidies There is a minimal risk enabling works costs are recoverable from developers Communities built along the network feed patronage to railway 8

9 Rail + Property : Government Gains A world w class railway ay network Land Premium IPO Proceeds Cash Dividends Market Cap (31/12/2005) MINUS: Initial Gov t Injection Total $75.8B $10.5B $2.3B $79.7B -$32.2B $136.1B Property developments along the railway network Significance of Property as a Means of Financing Railway Infrastructure HK$ Billion 8 7 Stabilizing of Profits Profit from Property Development 6 Profit from Property Ownership and Management (1) Profit/(Loss) from Railway and Related Operations Profit/(Loss) for the Year (2) Opening of URL Opening of LAR Opening of TKE 9

10 Property Development Portfolio Urban Lines Airport Railway Total l GFA: 2.6 million sq. s m. Total l GFA: 3.5 million sq. s m Tseung Kwan O Line SZL Total l GFA: 2.3 million sq. s m. Total l GFA: 2.9 million sq. s m Urban Lines Airport Railway TKO Line SZL4 * Office (sm( sm) Retail (sm( sm) Others (sm( sm) 234, ,363 Residential (flats) 31, ,363-31, , , ,722 28,565 20,000 90,814 58,130 30, ,000 (commercial use) 26,000 * For reference only. All figures are subject to approval. Total GFA 11.3 M sq m Conclusion A proven business model that relies on property to finance railway construction Business model benefits ALL No cost to Government or tax payers Government land is not compromised Build communities along railway We have turned our privileged access to property development rights into a tangible enhancement in return for a world class railway 10

11 PPP in some other Asian countries Jakarta Monorail Patronage guarantee Hyderabad PPP Land + VFG Mumbai Metro One VFG Bangkok Subway PPP Government provides civil structure Seoul Line 9 Patronage guarantee Beijing Line 4 Government provides civil structure Thank You 11