The Government has extended KiwiRail’s lease over more than 18,200 hectares of railway land by 100 years in a move aimed at encouraging commercial development and generating additional revenue for rail.
The Core Lease between the New Zealand Railways Corporation and KiwiRail previously expired in 2070. It will now run until 2170.
Rail Minister Winston Peters says the extension gives developers greater certainty to invest in buildings and infrastructure on vacant or underused railway land.
“Across the country, valuable railway land sits vacant or underused. We want to turn that wasted potential into productive investment, jobs and revenue.
“A short lease limits investment and depresses value. A long lease provides certainty, attracts capital and unlocks commercial opportunities,” Peters says.
The land will remain owned by the Crown through the New Zealand Railways Corporation and leased exclusively to KiwiRail.
“We are not selling the family silver. We are making it earn its keep,” Peters says.
The Government says existing iwi rights of first refusal over railway land will remain unchanged.
Peters says officials and KiwiRail have consulted iwi, with some expressing interest in participating in railway-property investment ventures.
“Every dollar earned from railway property is a dollar that can be put to work supporting rail rather than coming from taxpayers’ pockets,” he says.
New Zealand Railways Corporation and KiwiRail Holdings chair Suzanne Tindal says the extension will provide greater certainty over the time available to recover investments and generate returns.
KiwiRail chief executive Peter Reidy says property development will be important to growing the railway and helping its above-rail business become financially self-sustaining.
“This is a major step forward which will help grow rail for New Zealand,” Reidy says.
“Since 2018, governments have invested more than $2b in KiwiRail for new locomotives, wagons and upgrades to our mechanical facilities.
“We are committed to making our above-rail business self-sustainable and delivering on our growth targets. Revenue from our property portfolio is key to achieving this.”
Reidy says successful international rail freight operators commonly combine freight services with property development, including warehousing and logistics facilities.
“Extending the Core Lease by 100 years gives potential development partners the certainty needed to invest,” he says.
“Rail-enabled, fit-for-purpose developments – such as intermodal freight hubs – can unlock significant value for our rail freight customers and KiwiRail’s business, while supporting the efficient movement of freight around the country and regional economic development.”
