People
Using rail to transform communities
Steve Murphy, chief executive officer at MTR UK, discusses the business model that could change the industry’s fortunes
T
he impact of the Crossrail programme goes far beyond the improvements to the transport links in London and the South East. It is adding an estimated £42 billion to the UK’s economy, and driving regeneration, having been cited as a factor in planning applications equating to around 5.3 million square feet of residential, commercial and retail space. Steve Murphy, chief executive officer (CEO) of MTR UK, wants to tap into the opportunity rail infrastructure projects are creating. He is driving forward a vision that sees the rail industry capturing value in the transformations created, which could lead to projects happening sooner and more money being invested. “We are developing ourselves as a different sort of company in the UK’s rail industry, one that brings together railway operations, rail infrastructure and transport-focused property development,” he said. “Operations will always be at the heart of what we do, but we are a company that provides a wide array of solutions capturing the value we create. “This will start to create a positive cycle where you would see a railway company that is generating passenger demand, with wider value created being invested back into the railway itself.” A new mindset The vision is based on the model by the Hong Kong-based parent company MTR Corporation, which doesn’t just operate trains but builds railways and stations alongside developing mixed-use commercial, residential and retail properties. It is something that first came to Steve’s attention while working in marketing at Chiltern Railways during the first Evergreen project. Towards the completion of the project, estate agents would ring his phone regularly. “Initially I thought it was because they were rail enthusiasts, but then it dawned on me the reason they were ringing was because this had a significant impact on house prices and they wanted to get ahead of it,” he said. “During my time working as a general manager for Irish Rail I also experienced how much mobility can transform an area both socially and economically, particularly during the improvements to the Dublin to Cork railway route.” 10 | June 2022
As managing director of London Overground Rail Operations Limited (LOROL), during a joint venture between MTR and Deutsche Bahn, he and the team helped deliver Transport for London’s (TfL) vision to rebuild the Croydon to Dalston section of railway, which was no longer active.
The economic benefits from improving railways is significant, but in the UK the rail industry isn’t getting a share of those benefits “It was just amazing, and within weeks of opening the line, the area started to change and you could see it prosper, new businesses arrive and the area flourish incredibly quickly,” said Steve. “I’ve constantly been getting this lesson throughout my career and what it tells me is that the economic benefits from improving railways is significant, but in the UK the rail industry isn’t getting a share of those benefits. “The industry is almost completely dependent on passenger revenue and for a more sustainable
future we need to capture some of that value, after all we are the creators of it. The funding model for the industry can be changed and maybe it will also enable more projects to happen quicker.” World-class passenger experience A practical example of the MTR vision is the potential redevelopment and revitalisation work proposed at one of London’s major railway stations to expand the concourse considerably and deliver a world-class passenger experience and transport hub. This will be done in partnership with a leading property developer, with a commercial element that will fund the project. Steve said: “It is breaking this model of recognising we have a clear transport need and having to go to the government to request money to fund this. Our model demonstrates there are other ways of doing this in which we are capturing the value we will create by having a much bigger and better station upfront. “This links back to the fantastic Rail plus Property model that was developed by MTR in Hong Kong in the 1970s and ’80s. This sees railway development generating land value creation, but that very value creation is captured, at least in part, by the railway and reinvested in the railway. Using this model, our colleagues in Hong Kong have built more than 100 million square feet of developments to date and we’re excited to introduce this to the UK. railbusinessdaily.com