MTR Corporation (MTRC) has reaped rental income of HK$2.93 billion from leasing out commercial space at its railway stations in Hong Kong last year, almost doubling the figure in five years.
Over the past five years, the company has added 50,000 square feet of commercial space via renovation of stations without having to pay to the government the necessary land premium, which is estimated to be worth HK$2.3 billion, according to a Ming Pao Daily News report on Tuesday.
The MTRC is expected to raise ticket prices by 3.6 percent this year, after taking into account consumer price indexes and recent wage indices under the fare adjustment mechanism, despite the growth in commercial space rental income. Yet, the company is only setting aside up to 1.9 percent of its net profit each year as rebate to passengers in the form of 10 percent discount for every same-day second trip. Last year, only HK$125 million was allocated for such purpose.
Land Watch, a monitoring group on housing and land policies and chaired by former Democratic Party legislator Lee Wing-tat, noted that the Kowloon-Canton Railway Corp. (KCRC) was previously wholly-owned by the government, and hence the terms of its deeds were relatively loose as stations were built for transport, rather than for commercial purposes. However, those loopholes were not closed after the merger of KCRC and the MTRC in 2007.
Former KCRC chairman Michael Tien said what the MTRC is doing is like sub-letting the station space rented from the government to other business owners to make money. Tien said the MTRC has benefited from government policies with a railway-focus transport strategy and has been making consecutive years of substantial profits. It should observe its social responsibilities and settle the necessary land premium when adding new rental space at its stations.
An MTRC spokesperson said it would require approvals from relevant government departments for any changes in the number of shops within the stations, and that passenger safety remains the railway operator’s primary concern in planning its commercial space.
Meanwhile, the Lands Department confirmed that KCRC was allowed to engage in provision of goods and services within the station area under the previous ordinance. Since the KCRC was wholly government-owned, it was exempted from paying land premium. However, the department reserves the right to levy land premium on other MTR stations depending on the terms of the deeds.
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