Recently revealed documents indicate that the government, citing national economic interest of special importance, intends to lease the properties of major Budapest railway stations to private entities for the next 99 years.
Tamás Soproni, Mayor of Terézváros (Budapest’s District 6), announced on Saturday that the railway areas around Nyugati (Western) Railway Station are to be privatised. However, according to the announcements, many rural stations, as well as Déli (Southern), Keleti (Eastern), and Kelenföld stations are also affected in the tenders closing at the end of January.
According to the tender, the goal of MÁV Plc. is to implement property developments meeting the demands of the current century, while in its response to our newspaper, the state railway company stated that further consultations are expected to finalise the concepts. However, according to Dávid Vitézy, a representative on Budapest’s General Assembly, this is exactly the model of ‘plundering privatisation’ that characterised Hungarian politics in the early 1990s in the wake of the system change.
Mohos Márton / 24.hu
Vitézy: You will not see this happen in Western democracies, nor in Arab oil monarchies
Keeping the properties in public ownership, while involving external funding sources in their development to achieve results faster, across more locations and with greater impact – this is the essence of the national railway station renovation programme for which the Ministry of Construction and Transport (ÉKM) and the Máv Group is now announcing a tender.
This is how the announcement begins on the state railway company’s website. According to the official justification, the core idea of the programme is that property developers who successfully participate in the tender will gain the opportunity to use parts of the railway properties – that are delineated from rail traffic – commercially, while the stations, railway areas, and their surroundings remain state-owned without exceptions and throughout the entire cooperation period.
The winning project companies will manage all Budapest railway station properties from 2025 to 2124. Specifically:
Nyugati Railway Station: The entire historic hall, the entire railway operational area, the undeveloped strip along Podmaniczky Street (formerly government district plots) up to Dózsa György Street.
Keleti Railway Station: The entire historic hall and the area up to Kerepesi Street, including the area of the coach repair workshop near Vágány Street.
Déli Railway Station: The entire area, including the areas along Mészáros Street, and all railway operational areas between Hegyalja Road and Krisztina Boulevard.
Kelenföld Railway Station: The entire area, along with highly valuable development areas south of the Volán bus station.
Dávid Vitézy stated to our newspaper that there is no doubt about the enormous development potential of these areas. As an example, he mentioned that the properties behind Nyugati could host Budapest’s new congress centre, while the area near Kelenföld could be an ideal location for a new mega-hospital in Buda. He reminded that there are several international examples of high-quality retail facilities being established in railway stations, but under the European model, the city, state, and national railway companies utilise parts of the station with knowledge and planning, as was the case with Vienna’s main station.
The former State Secretary for Transport sees the biggest problem with the tender as its lack of restrictions related to urban development or future railway operations and functionalities. This means that if the state, decades later, wants to modify the track layout, expand passenger areas or rebuild the line, it will have to negotiate with a private investor.
Regarding the property developments, the programme only lists the following general ideas:
significantly increasing passenger satisfaction for those using railway transportation,
encouraging the public to choose rail-based transportation,
contributing to the infrastructural development of key railway stations, their surroundings, and the railway network,
increasing the number and quality of services available around the stations,
as well as profitability in the medium and long term on a market basis through effective participation of external partners (investors and developers).
However, for a 99-year timeframe, these definitions are rather broad. The scale and scope of the expected projects are unclear from the tenders: as far as these specifications go, the developments could be anything ranging from the renovation of a few vacant shop spaces to extensive, multi-hectare, billion-dollar real estate developments.
Vitézy pointed out that in any civilised European country, it’s hardly customary to just put the city’s most valuable areas on the market without any restrictions or visions for urban and railway development, exposing the state’s interests to the solely profit-driven motives of real estate developers for a century.
You will not see this happen in Western democracies, nor in Arab oil monarchies; but we don’t see such things in East Asian cities developing with lightning speed, either
– he stated. Going even further, he claimed that “a tender unilateral to this extent, exposing the state, the railway and its passengers to private interests for 99 years would be considered surprising even in Africa or Latin America.”
Varga Jennifer / 24.hu Dávid Vitézy
MÁV’s position: municipalities will be significant participants in the process
On the other hand, MÁV Plc. sees the situation in a completely different light. Responding to 24.hu’s inquiry, the railway company stated that the entire point of the first – tendering – phase of the multi-tiered, nationwide station renovation programme is that the ministry and the railway company, currently exercising ownership rights, could first examine potential property developers’ proposals and ideas. Only afterwards will the developers and investors be selected and joint project companies with MÁV established at the tender’s highest, national level.
The finalisation of the concepts and consultations with stakeholders will take place within this framework through dialogue with the project companies
– they stated.
Regarding whether there were consultations with the Municipality of Budapest or the affected districts before issuing the tender, the response was somewhat evasive, stating: municipalities would be significant participants in the development process, as the urban district developments realised through the station renovation investments can only be implemented with their cooperation.
When asked about the total value of the properties likely to go to private companies, MÁV replied that the question made no sense, “as no station building will be sold, and no property will go into private hands: all developed properties will remain state-owned, contributing to public wealth.”
(Nevertheless, the tender states that properties owned by MÁV Plc. will be transferred as capital contributions to the selected project companies. Therefore, it remains unclear what exactly will happen to the affected properties when the contracts expire in 2124.)
It is also mentioned in the tender that the selected bidder will acquire ownership in the project company through a capital increase based on a syndicate agreement with MÁV Plc. Vitézy argued that this could even allow the winning bidder to extract profits for its own benefit.
Moreover, in Dávid Vitézy’s interpretation, transferring the railway station properties into private use would make it impossible to develop them with 100% non-refundable EU funding, as this would be a disqualifying condition.
The Budapest Mayor’s Office was also contacted for their opinion on the plans of the ministry and MÁV. They briefly replied that there had been no consultations on the matter and that they were studying the development plans and their potential effects. The Ministry of Construction and Transport has not responded to our questions so far.
The post Government to transfer railway station properties into private hands until 2124 – this is the model of plundering privatisation, says Dávid Vitézy first appeared on 24.hu.
