Railway systems are essential in high-density urban areas in emerging economies to provide better services to their citizens and reduce the negative effects from ongoing private motorisation. However, cities and their transit agencies struggle to finance these systems due to the high upfront-investment costs and continuous maintenance and network expansion, especially when transit is conceived as mere infrastructure works. Nevertheless, when transit planning is integrated with land-use planning in favour of transit-oriented development (TOD) strategies that generate dense, mixed-use areas around transit stations, land value capture (LVC) can be generated as a positive loop in which the value of land surrounding the stations is created, realised, captured and reinvested to cover part of the capital costs to finance transit infrastructure.

In Hong Kong, the Mass Transit Railway Corporation (MTRC) has successfully implemented its metro system through its Rail+Property (R+P) model, a public-private cooperation with a government-led approach. Under this development-based LVC mechanism, the MTRC does not receive subsidies from the government, but is granted the development rights as the main entity for master planning, property development and management. In this way, the MTRC receives revenues from other sources outside transport operations, such as residential and commercial development, property leasing and management, consultancy services, etc. However, this model raises the question about its replicability in other contexts that do not present the same particular conditions as those in Hong Kong. For this reason, this study will delve into the background of the R+P model and the MTRC to learn from this innovative mechanism to finance transit infrastructure and provide liveable and mixed-use areas.

This research is structured in four sections. First, a general overview about the need of railway systems is presented, including key concepts for transit financing. Then, this study will introduce the case study of Hong Kong metro within its local characteristics. In this section, the roles of the MTRC and the procedures of the R+P model will be explained. The following section will assess the co-benefits of this approach and its impact in the city, which will be followed by the question on the replicability of the model and policy recommendations. Finally, the future of the R+P model will be exposed and its recent criticisms. The study will close with final conclusions and remarks.