Land development becomes a lifesaver for railway construction financing

 

　　Five provinces initiate a new model of 'supporting railways with land' for railway financing

 

　　On the 25th, the public bidding for the selection of assessment agencies for land evaluation and authorized operation asset disposal projects of China Railway Corporation officially opened. This marks the official launch of land development by China Railway Corporation. According to incomplete statistics from reporters, five provinces including Guangdong, Fujian, Jiangxi, Anhui, and Sichuan have explicitly proposed to make up for the shortage of railway construction funds through land development along railway lines.

 

　　Currently, how to solve the difficulty of railway financing is becoming the top priority for all parties involved in railway construction, with intercity railway construction particularly noteworthy. In August last year, the State Council issued the "Opinions on Reforming the Railway Investment and Financing System and Accelerating Railway Construction", explicitly opening the ownership and operating rights of intercity railways, suburban railways, resource-development railways, and branch railways to local governments and social capital, and encouraging social capital to invest in railway construction.

 

　　National policies have been implemented, but in this year's local government work reports at the Two Sessions, intercity railways are rarely mentioned. In fact, since intercity railways were explicitly delegated to local governments last year, their construction is facing an awkward situation. On the one hand, local governments that have been advocating for intercity railway construction are financially constrained after gaining construction leadership; on the other hand, private enterprises that have been calling for entry into the railway sector have quieted down after receiving policy support.

 

　　According to reporters, since the State Council document was issued, only one intercity railway company has been established, namely the Chuannan Railway Company. According to the initial plan, the Chuannan Intercity Railway Company was to be open to social capital, and even promised that social capital could hold a controlling stake. On February 20, six parties related to the construction of the Chuannan Intercity Railway signed a cooperation agreement, clarifying the formation plan of the Chuannan Intercity Railway Co., Ltd. The awkwardness is that after half a year of investment promotion, no private capital was willing to join the Chuannan Intercity Railway Company until its establishment.

 

　　Wang Mengshu, an academician of the Chinese Academy of Engineering, said that railway construction requires a large amount of funds, has a long return cycle, and relatively low profitability. Except for some coal transport lines, private enterprises will not invest large amounts of funds in unrelated railway lines, and we cannot rely on private funds to solve the railway funding problem.

 

　　Industry insiders believe that in the face of huge railway debts and huge funding needs for railway construction, external blood transfusion cannot truly solve the problems of railway funding shortages and heavy debts. It is necessary to tap into the railway's own stock, and the largest stock is the land along the railway lines.

 

　　The "Opinions" point out that efforts should be increased to revitalize railway land resources and encourage comprehensive land development and utilization. Support comprehensive development of railway station and line land, moderately increase development and construction intensity, and encourage comprehensive development of above-ground and underground spaces of existing railway construction land.

 

　　"Railway construction brings land appreciation, and land appreciation supports railway construction, thus forming a virtuous cycle." Li Liancheng, director of the Transport Economy and Technology Research Office of the Comprehensive Transport Research Institute of the National Development and Reform Commission, told the Economic Reference News reporter that railway construction will certainly have a positive impact on related industries along the line, and land prices along the line will rise with industrial development. For this reason, property development around intercity railways is also reasonable.

 

　　A research report by Hongyuan Securities stated that the total land ownership area of Guangshen Railway is about 12 million square meters, with the area occupied by stations and sections along the Guangshen line being about 4 million square meters. Due to the good economy of the hinterland along the Guangshen line and the low utilization rate of some stations along the line, there is large room for development. Based on preliminary estimates, the land appreciation space (static and dynamic) of the stations and sections along the line exceeds 10 billion yuan.

 

　　At this year's National Railway Work Conference, the management and development of land assets along railway lines was also listed as one of the key tasks of railway reform in 2014. Comprehensive land development is becoming the lifesaver to "untie" the railway, and is highly expected, having already blossomed in many places across the country. Under the call of the State Council document, many places quickly followed up and issued supporting policies.

 

　　In August last year, the Hubei Provincial Government issued the "Opinions on Strengthening Comprehensive Land Development Along Intercity Railways in the Wuhan Metropolitan Area", proposing that the net income from comprehensive land development along intercity railways should, in principle, first be used to make up for the operating losses of intercity railway projects and support the sustainable development of intercity railways.

 

　　In September last year, Fujian Province issued the "Notice on Eight Measures to Reform the Railway Investment and Financing System and Accelerate Railway Construction and Development", encouraging comprehensive development and utilization of land along railway lines, including railway station land, and the above-ground and underground spaces along railway lines will be included in the scope of market-oriented development. The Fujian Provincial Department of Land and Resources arranges no less than 3,000 mu of land indicators each year, specifically for land development along railway lines. The development income is shared between the Provincial Railway Investment Co., Ltd. and local governments according to a certain proportion, and the full amount is used for railway construction.

 

　　In Anhui, the Wantou Railway Investment Company, which represents the Anhui provincial government as the investor in railways, stated that this year it will launch land development along the line to raise funds as an annual key task. In Sichuan, the newly established Chuannan Intercity Railway Company is allowed to have priority in the comprehensive development rights of land around railway stations and lines in accordance with land use planning and urban planning, as well as special mineral resource operating rights, etc.

 

　　In fact, in recent years, constrained by financing difficulties, many places had been thinking about land before the State Council document was issued.

 

　　Zhao Jian, a professor at Beijing Jiaotong University, said that drawing on foreign experience, the construction of intercity railways can be combined with real estate development along the line, but currently, promoting the land development model for intercity railways in China, especially high-density development near railway stations, will face some challenges.

 

　　He pointed out that land management is under the jurisdiction of the land department, urban construction is under the construction department, and the construction and planning departments have an overall plan for the city. If the urban plan is not adjusted, high-density development near railway stations will be difficult to carry out. In addition, according to the regulations of the land department, transportation land cannot be used for commercial land, and these policies need to be adjusted.

 

　　According to reporters, relevant departments in Guangdong Province are studying and formulating related land management measures to support TOD (transit-oriented development) of intercity rail transit stations. Guangdong is also striving to allocate land around railway stations together with project land to project owners, and it can be directly developed and constructed as commercial land.