'Railroad Undergrounding and GTX' Funding... Considering REITs Option

Exploring REITs Activation Plans for Private Railway Projects
Private Railway Projects Mainly Invested Through SPCs

The Ministry of Land, Infrastructure and Transport (MOLIT) is considering utilizing Real Estate Investment Trusts (REITs) to promote private railway projects such as railway undergrounding and the Greater Seoul Metropolitan Area Express Railroad (GTX).

On the 5th, MOLIT will hold a "Ministry of Land, Infrastructure and Transport Industry Relay Meeting" for the railway industry sector in Seoul. On this day, related organizations including Gyeonggi Province, Korea Rail Network Authority (KR), Korail, and the Railway Association, along with private sector companies such as construction and design firms, vehicle, system, and parts manufacturers, will gather to discuss ways to strengthen the competitiveness of the railway industry through REITs.

Railway photo near Yongsan Station. The above photo is unrelated to the article content. [Photo by Yonhap News]

At the meeting, the REIT industry and private station operators will share their views on revitalizing REITs in private railway projects. A MOLIT official stated, "Recently, private investment projects such as railway undergrounding and GTX have been activated, so we are considering ways to utilize REITs in private railway projects. To this end, we plan to hear from the REIT industry about what improvements are needed and from private station operators about what obstacles hinder station operations."

Until now, private railway projects have been invested in by forming special purpose companies (SPCs) under the Commercial Act. The MOLIT official said, "There are no legal restrictions on REITs participating in private railway projects. However, REITs have not been utilized, and only SPCs have been used in private projects." He added, "There have been industry opinions that REITs have not been utilized in private projects. We intend to listen to what institutional obstacles exist to using REITs and how the profitability of REITs can be pursued."

Meanwhile, at the meeting, MOLIT will announce major policies currently being promoted in the railway sector. Following this, discussions will be held on suggestions for domestic and overseas railway project promotion, support measures for small and medium-sized enterprises (SMEs) and mid-sized companies. Additionally, discussions with financial and private operation companies, as well as travel and film companies, will explore ways to revitalize the local economy through tourism content development using stations and trains.

Minister Park Sang-woo of MOLIT stated, "In line with the 20th anniversary of the KTX opening and the dawn of the GTX era, we will prepare concrete measures such as institutional improvements, tourism and cultural product development, and international cooperation to ensure that the domestic railway industry secures global competitiveness. We will continue to provide necessary support and communication."