---
title: Can Hong Kong Inspire New Ways to Fund UK Public Transport Infrastructure
url: "https://www.systra.com/ireland/expert_insights/can-hong-kong-inspire-new-ways-to-fund-uk-public-transport-infrastructure/"
type: expert_insights
date_published: 2023-06-15
date_modified: 2023-10-09
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language: en-IE
word_count: 1126
reading_time: 6 min
canonical: "https://www.systra.com/ireland/expert_insights/can-hong-kong-inspire-new-ways-to-fund-uk-public-transport-infrastructure/"
featured_image: "https://www.systra.com/ireland/wp-content/uploads/sites/24/2023/06/hong-kong-scaled.jpg"
type-insight:
  - Optimising the Journey
---

# Can Hong Kong Inspire New Ways to Fund UK Public Transport Infrastructure

![Can Hong Kong Inspire New Ways to Fund UK Public Transport Infrastructure](https://www.systra.com/ireland/wp-content/uploads/sites/24/2023/06/hong-kong-scaled.jpg)

**Transport planners are often asked to ‘sort out’ transport provision for a development long after its location has been set. That is the wrong way round. Transport planning and land use planning should go hand-in-hand.**

Developing higher density housing, employment and other uses around transport
hubs can create sustainable communities where active travel and higher use of
public transport drive down carbon emissions and help create healthier, more
liveable environments. If transport operators, local authorities and developers
work together more closely at all stages of the development planning process,
there are opportunities to fund new transport infrastructure without having to
rely on Central Government funds.

With new homes and businesses bringing customers into a transport network, and
the convenience of a transport network attracting residents and businesses, this
approach can be mutually beneficial for the public transport operator and
developer. It is a model called Transit-Oriented Development (TOD), which has
been successfully deployed in urban centres around the world, such as Hong Kong,
North America, Sweden and Denmark. In the UK, it could mean building schemes
around a new station on an existing rail line, extending light rail lines or
linking developments into bus rapid transit networks.

### Transit-oriented development creates sustainable communities

Hong Kong is often held up as an exemplar for TOD. Long before the concept of
the 15-minute city became popular, Hong Kong was using TOD to work to that
principle.

> “Rather than the 15-minute city, in Hong Kong we have ‘first mile, last mile’.
> The principle is that the development is community centric. The proposition is
> to reduce vehicle trips and to make the network more attractive and
> accessible. In HK, we have 90% of daily commuters travel by public transport.
> This is by far the highest in the World.
> The success of TOD in Hong Kong is down to a far-sighted approach to planning
> that began when the Mass Transit Rail Corporation (MTRC) was formed in 1975.
> In Hong Kong we have had a very strong institutional arrangement for the past
> 45 years.  The Government plays a strong part, as 75% owner of MTRC with all
> parties working together to resolve potential conflict and interfacing issues
> at an early stage of the planning.”
> Francis Sootoo

The main funding model used for TOD in Hong Kong is knows as Rail + Property
(R+P). The Government grants land around a new station to the transport operator
who then puts developments out to tender, with planning in place. The developers
gain a return on investment from the sale of high-end residential apartments and
rental incomes and may retain ownership of commercial or hotel space.

![hong-kong-tod-plan-showing-the-developing-phases](https://www.systra.com/ireland/wp-content/uploads/sites/24/2023/06/hong-kong-tod-plan-showing-the-developing-phases-1024x555.jpg)

_Hong Kong plan showing the developing phases._

The revenue gained from the sale of the land and the associated development pays
for the rail infrastructure provision and supports the operational costs in the
early years as the development is implemented. And in the longer term, MTRC
benefits from having passengers living in close proximity to its station, and
from revenues gained from retail and other uses of space it retains around the
station.

Transport for London (TfL) is pursuing a similar approach for developing schemes
above existing stations. In February 2023 its recently established property
company, TTL Properties announced a joint venture deal with property developer
Helical for over-station developments at Bank, Paddington and Southwark
Stations. All three sites have full planning permission for office developments
with the joint venture company, of which Helical has a 51% share, purchasing the
leasehold interest in the sites from TfL.

There are other mechanisms that could be used in the UK to capture rising land
values to pay for new infrastructure, all of which have pros and cons. These
include re-evaluating business rates of commercial properties whose value has
been raised by infrastructure developments or raising stamp duty and land tax on
properties at the point of sale.

Local authorities can already charge a Community Infrastructure Levy (CIL) as a
planning obligation to put towards transport, flood defences, schools, health
and social care facilities. This mechanism raised funds for Crossrail in London
and in Birmingham, CILs imposed since 2013 are being used to fund its new
Metrobus bus rapid transit system. The downside to CILs is that it is a long
time before businesses see any uplift due to the new infrastructure. This means
that it is unlikely to be a sustainable way of raising money in some UK regions.

### Incentivising Development in Public Transport Corridors

The three elements that must be in place for successful TOD are the right
institutional framework, efficient land assembly and a streamlined planning
process. To deploy TOD in some of the UK’s poorly connected regions and
communities, changes to planning policy and legislation would be needed at a
national level.

For instance, at present local and regional authorities do not have much
influence over land owned by National Rail – apart from in Scotland where the
laws are different. Changes in England could give more power over land use
around railways to the Combined Authorities that control city regions. Updates
to the national planning framework, so that higher density developments on mass
transit corridors are favoured, would also be helpful, as this would encourage
land owners around public transport routes to seek planning permission with the
increased confidence that permission for the right development will be granted.
This will allow them to programme in future enhancements to Public Transport
infrastructure and sustainable accessibility into their development masterplans.

Another lesson that we could learn from Hong Kong is how to integrate transport
infrastructure into its surrounding town or city. Whereas in the UK, a train or
bus station is simply seen as transport infrastructure, in Hong Kong the station
and its many approaches reach out into the surrounding neighbourhoods, enhanced
with retail, cafes or other uses, drawing people in.

With transport and land planners working closely together, the UK can use TOD to
make transport hubs equally vibrant and attractive locations. In Hong Kong, the
most expensive housing is closest to the rail station. That could happen in the
UK too.

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