Since 1982 KCRC has greatly expanded its rail network. In 1984 the Corporation accepted the Government's invitation to build and operate a light rail system in the North West New Territories. Feeder bus services were first introduced in 1986. Light Rail commenced service in September 1988, initially serving the new towns of Tuen Mun and Yuen Long, and later extended to serve the Tin Shui Wai new town.
The 1990s saw the beginning of what would be a 10-year programme of major expansion of the heavy rail. The original Kowloon-Canton Railway was first renamed as East Rail in 1996. Construction of West Rail, which provides a mass transit rail service between Tuen Mun and Yuen Long in North West New Territories and Nam Cheong in urban Kowloon, began in 1998. West Rail commenced operation in December 2003, with Light Rail assuming an additional role of providing complementary services to the new line.
Planning also began in 1998 on three extensions to East Rail. In October 2004 the opening of the Tsim Sha Tsui Extension extended East Rail southwards from Hung Hom to East Tsim Sha Tsui. In December of the same year, Ma On Shan Rail came into service, serving the North East New Territories with easy access to East Rail via Tai Wai Station. August 2007 saw the opening of the final extension, Lok Ma Chau Spur Line, which provides a convenient second railway crossing for passengers to enter the Mainland at Lok Ma Chau.
Another project awarded to the Corporation in 2002 was the Kowloon Southern Link (KSL), which is a natural extension of West Rail from Nam Cheong Station to East Tsim Sha Tsui Station. The project also included a pedestrian subway extension from the latter station to the shopping area at Canton Road. Construction works began in November 2005.
In June 2002, following a competitive process, the Corporation was awarded the bid to plan, build and operate the Sha Tin to Central Link (SCL). Also in the same month, the idea of a merger of KCRC and the MTR Corporation Limited (MTRCL) was first floated by the Government. This culminated in the merger of the railway operations of the two companies in December 2007, when KCRC granted a service concession to MTRCL to operate its railway system for an initial period of 50 years in return for the MTRCL making fixed and variable annual payments to the Corporation. KCRC remains the owner of the KCRC network and associated railway assets, with MTRCL required to return these assets at the expiry of the Service Concession unless the latter is extended.
On the rail merger in December 2007, KCRC appointed MTRCL as the project manager for on-going KSL works, with KCRC being still fully responsible for financing the project till completion. The KSL was opened for passenger operation in 2009, and has now become part of the West Rail Line.
Following the rail merger in December 2007, MTRCL also took over responsibility for further planning, design and construction of the SCL project. Construction commenced in 2012. The Tai Wai to Hung Hom section is expected to be completed in 2018, and the Hung Hom to Admiralty section in 2020. The Government has indicated that upon completion of the project, it may vest the railway in or lease it to the KCRC. The Corporation would in turn be expected to include the railway into the service concession granted to the MTRCL in exchange for receiving appropriate fixed and variable annual payments.
As of mid-2014, KCRC owns a railway system (operated by MTRCL) that has expanded from a single railway track of only 35 kilometres into a modern comprehensive heavy and light rail network of over 120 kilometres, comprising the current East Rail Line, West Rail Line, Ma On Shan Line, Lok Ma Chau Spur Line and a light rail network in North West New Territories. There is also a network of complementary feeder bus services. Through-train inter-city passenger services are run between Hong Kong and six Mainland cities, including Beijing and Shanghai. Average ridership on the whole KCRC-owned rail and bus network now exceeds 2.4 million per day.
In order to help fund the construction of its expanded network, KCRC had undertaken a number of property development projects since 1982. These took the form of joint ventures with private developers to build residential developments, often with commercial facilities, on sites adjacent to and atop railway stations. KCRC’s first residential development, Pierhead Garden at Tuen Mun, was completed in 1988. By 2007, five more residential developments and two commercial facilities had been completed, yielding a total of over 760,000 and 340,000 square metres of residential and commercial floor areas respectively. Planning and construction were also underway for more than a dozen property sites along Light Rail, East Rail, Ma On Shan Rail and West Rail (those along West Rail were being developed by KCRC on behalf of the Government). KCRC also provided property management services for eight residential and commercial developments. As part of the rail merger in December 2007, with the exception of those sites along West Rail, MTRCL purchased the Corporation’s then existing subsidiaries providing property management services as well as the property development rights for all sites then under development. KCRC remains responsible for developing the West Rail sites with MTRCL as its development agent.