Can Tony Tiu break even on his planned investment in $3.7B Makati subway?

The inter-city Makati subway project is getting everybody in the central business district excited but will it survive long enough to realize a profit?
Nicky Franco, head of research at Abacus Securities, wonders how the consortium led by businessman Antonio Tiu can recover its massive investment in the country’s first underground railway.
Targeted to be completed by 2024 or 2025, the 10-kilometer Makati subway is patterned after Hong Kong’s MRT.
Franco said it would take a long time for the Makati subway proponents to recover their investments even if they collect fares 20-25 percent above current train rates.
If fare collections average P7.7 billion each year, “How will they close the gap?”, Franco said.
“Even if there will be a hectare (which is a lot) of commercial spaces at each of the 10 stations, annual lease revenue at P1,000/sqm would only be P1.2 billion. Still quite a gap. And apparently, no subsidies,” he added.


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