Accounting for around 60 per cent of all mainstream assets and representing more than 3.5 times total global GDP, real estate is by far the largest store of wealth globally
The value of the world’s real estate is around $280.6 trillion (£211 trillion) This makes real estate an extremely attractive market for railway companies worldwide to tap into, with many seeing it as a significant opportunity to boost their bottom line and improve passenger experiences.
Historically, there has been a low level of interaction between the real estate departments of different national and international rail and train companies. However, this is all set to change with the formation of the Across Rail Property Group (ARPG). The group is targeted at all those working in property and real estate for railway companies worldwide and aims to provide a platform for individuals to network and learn from each other. We caught up with the Group to find out more.
Why is real estate so important to railway companies today?
With approximately four trillion passenger kilometers travelled on the global rail network in 2019 alone, the railway is undoubtedly an integral mode of transport for many individuals and communities. They depend on it to connect them to jobs, people and places, which makes stations often the focal point to many towns and cities. In fact, according to a recent study by Nationwide, homeowners in England are willing to pay approximately ten per cent more for a property within 500 metres of a train or tube station.
This means railways across the world are sitting on potentially highly valuable real estate, both in terms of residential development sites, as well as for commercial and retail opportunities – a point which is evidenced by the fact that over 250 million customers visited retailers within the UK railway network in 2018/19 alone.
While these numbers highlight the importance of real estate to railways, tapping into the market shouldn’t just be seen as a commercial revenue generator. Real estate also offers fantastic opportunities to transform the passenger experience. The first and last part railway passengers will experience is the train station they walk through on their way to catch or leave their train. Improving this environment can have a significant impact on passenger satisfaction levels. For example, the UK Railway recorded a 66 per cent increase in passenger satisfaction levels when the newly renovated Birmingham New Street Station opened to the public in 2015.
Beyond track and trains, real estate also offers railway companies a vast array of opportunities to develop diversified businesses which support passengers in their lives outside of travel, such as hotels, gyms, health centres and housing developments. For example, in the case of many Japanese railway companies, up to around a third of their revenue comes from non-railway sources.
While the full spectrum of opportunities created by collaboration between railway companies and real estate is yet to be realised, there is an increasing level of understanding that the two go hand in hand. New designs now regularly integrate and combine high quality real estate proposals alongside operational railway developments, which holds transformative potential for driving housing, jobs and economic growth.
Will Covid-19 not have changed real estate markets globally?
Without doubt, Covid-19 has accelerated many of the trends the railway and real estate markets have been facing globally for some time, from working from home replacing daily commuting, to online shopping replacing in-store retail. However, markets are cyclical and while technology will transform many aspects of our world over time, the core fundamentals of people needing places to live and work will always remain. There is an often-quoted phrase in the real estate profession which goes as follows: ‘The thing about land is that they don’t make it anymore.’
As long as land is a finite resource, there is going to be demand for it. In addition, countries which have seen success in coping with Covid-19, such as China, have also demonstrated that passenger numbers on railways can rapidly bounce back, suggesting there is likely to remain considerable demand for rail travel post-Covid-19, and hence a similar demand for related real estate such as shops and hotels.
Why is it so important to have a group like the Across Rail Property Group?
While there’s a significant number of people working in real estate for railway companies globally, sharing hard-earned experience between those in the field has been somewhat of a rarity to date. What the ARPG aims to do is to create a forum where anyone who works in real estate for any train or railway company, private or public, can learn from this vast wealth of experience, and by doing so help improve our railways worldwide. In the short term, we are looking to act as a platform for those working in the field worldwide to network and share knowledge. In the longer term, if the group grows, we would like to help members promote the opportunities offered by a career in railway real estate.
Our vision is ultimately to be a global group, for an interconnected worldwide railway, where we can all help each other to create better railway real estate for all our passengers and customers over time.
More details about the Across Rail property Group and their latest networking events can be found on their website: www.acrossrailwaypropertygroup.com or by following on LinkedIn at: www.linkedin.com/company/across-rail-property-group