CRC plans real estate development

China Railway Corporation (CRC), the national railway operator, is mulling real estate development to subsidize its fixed-assets investment and operational costs, State media reported Monday.

A scheme on land development along railways, drafted by the National Development and Reform (NDRC), has been approved by the State Council and is expected to be published as early as late May, Economic Information, a newspaper run by the Xinhua News Agency, reported Monday, citing people familiar with the matter.

The State Council released a guideline on speeding up rail construction in August 2013, which encourages firms to develop land alongside rail lines and requires local governments to support the development.

CRC has rolled out development plans for 18 projects. One of the projects aims to develop land near several stations in Southwest China's Yunnan Province into warehouses, residential and tourism properties. Some of the other projects are located in East China's Fujian and South China's Hainan provinces, the report said.

Expansion of the railway network will cause land alongside rail lines to appreciate and bring business opportunities, Peng Kaizhou, vice president of CRC, was quoted as saying.

CRC has recently raised its fixed-assets investment target to more than 800 billion yuan ($128 billion) for 2014, up from 630 billion yuan it set in the beginning of this year, fueling concerns that the target will be hard to reach.

Revenues from the land development could be used to finance railway construction and operation, experts said.

There are nearly 4 million square meters of land near a rail line linking Shenzhen with Guangzhou, which will generate revenue of more than 10 billion yuan, Hongyuan Securities estimated in a note published in September 2013.

However, the approval for land development involves several government departments including the Ministry of Land and Resources (MLR) and the Ministry of Housing and Urban-Rural Development, Zhao Jian, a professor with the School of Economics and Management at Beijing Jiaotong University, was quoted by Economic Information as saying.

According to the MLR, land for transportation use cannot be used for commercial purposes. It is also difficult for high-density development near railway stations, unless authorities adjust existing urban planning regulations, Zhao said.

The scheme drafted by the NDRC will solve such issues, the source told the paper.