TNAG-0563-FCO40-658-Construction-of-an-underground-railway-system-in-Hong-Kong-1975 — Page 234

PROPERTY

8.1

8.2

8.3

The Provisional Authority having envisaged that the Corporation should have the power to exploit to the fullest commercial extent all station and depot sites, a short exercise has been carried out to assess the potential benefit to the MTR of such property develop- ment.

Development of the railway will further enhance the value of these sites, and it seems reasonable to associate such property develop- ment with that of the railway, particularly as this is normal practice.

Four sites appear to have development potential:-

Kowloon Bay Depot Pedder (GPO) Admiralty

Argyle

For the purpose of the exercise, it has been assumed that the MTR will be given long building leases of the sites at the appropriate premium in exchange for equity, and that in the cases of the GPO and Kowloon Bay Depot sites, if the MTR were not to engage in property development, then it could recover substantial compensation towards the cost of the foundations that will be constructed, which in addition to meeting the needs of the MTR, will also provide the basic pile grid for develop- ment work.

8.4

The measure of net benefit to the Corporation has been taken as the difference between the estimated market value of the development upon completion and total development expenditure accumulated at compound interest to the completion date. 1974 values have been used and the potential profit on disposal is estimated at $2,300M if development expenditure is capitalised at 9%, or $1,200M if 15% is used. The development profit is material and, it is submitted, should not be dissociated from the considerable cost of building the MTR.

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