The Limits of a Success Story: Rethinking the Shenzhen Metro “Rail Plus Property” Model for Planning Sustainable Urban Transit in China

Land Value Capture (LVC) is increasingly being emphasized as a key mechanism for financing mass transit systems, promoted as a sustainability-oriented policy tool amid tightening public budgets. China has adopted a development-led approach to value capture through the “Rail plus Property (R + P)” model, drawing inspiration from the Hong Kong experience. The Shenzhen Metro’s “R + P” strategy has been widely acclaimed as the key to its reputation as “the only profitable transit company in mainland China without subsidies.” This paper questions this assumption and argues that the Shenzhen model is neither sustainable nor replicable, as its past performance depended on two exceptional conditions: an ascending phase of a real-estate cycle and unique institutional concessions from the central state. To substantiate this argument, we contrast Shenzhen’s value capture strategy with that of Nanjing—a provincial capital operating under routine institutional conditions, with governance and spatial structures broadly reflecting the prevailing urban development model in China. Using a comparative framework structured around three key dimensions of LVC—urban governance, risk management, and the transit company’s shift toward real estate—this paper reveals how distinct urban political economies give rise to contrasting value capture approaches: one expansionary, prioritizing short-term profit and rapid scale-up while downplaying risk management (Shenzhen); the other conservative, shaped by institutional constraints and characterized by reactive, incremental adjustments (Nanjing). These findings suggest that while LVC instruments offer valuable potential as a funding source for public transit, their long-term viability depends on early institutional embedding that aligns spatial, fiscal, and political interests, alongside well-developed project planning and capacity support in real estate expertise.