To start the construction work, the professor said sanctions on the DPRK should be lifted in a broader way, but he noted that Pyongyang and Washington had yet to narrow a gap in negotiations on how to denuclearize the Korean Peninsula.
South Korea said in November it had won exemptions for the rail survey.
Moon insists his outreach to North Korean leader Kim Jong Un is the only way to build trust and convince him to surrender his nuclear weapons.
Officials from South and North Korea stand in front of a road sign during the ceremony for a project to modernize and connect roads and railways over the border between the Koreas at Panmun Station, Dec. 26, 2018, in Kaesong, North Korea.
The materials and investment needed for construction to begin are banned under United Nations and U.S. sanctions imposed over Pyongyang's nuclear and missile programmes.
But beyond on-site reviews and ceremonies, the Koreas can not move much further along without the removal of US-led sanctions against the North.
"It may be hard to prognosticate a drastic improvement in the North-U.S. ties, but the negotiation phase may continue so as to go beyond their longstanding hostile relationship and craft a new agreement", it said.
The ceremony kicked off at Panmun Station in the North's border town of Kaesong at around 10 a.m., according to the South's Ministry of Unification.
Speaking at the event, the North's Vice Railroad Minister Kim Yun Hyok called for an "unwavering determination to stand against headwinds" that could threaten the project.
The project is one of the several peace gestures to which North Korean leader Kim Jong Un and South Korean President Moon Jae-in agreed at a historic summit in April.
"The railways will not only reduce time and space but also the distance between the hearts of the South and North", South Korean transport minister Kim Hyun-mee said at the ceremony.
'We plan to hold detailed negotiations with the North to coordinate on the specific levels we want to achieve in the modernization of railways and roads and how to carry out the project, ' said Eugene Lee, the ministry's spokeswoman.
The same thawing also saw American President Donald Trump meet with Kim in Singapore for the first ever summit between the two countries.
The last rail service during the 1950-1953 Korean War came in 1951 when a train carrying wounded soldiers and refugees crossed into South Korea.
If sanctions are lifted on Pyongyang and construction work starts, railways and roads can be linked from the South Korean capital Seoul to the DPRK's northwestern city of Sinuiju that can be connected to the Trans-China Railway. The South Korean Defense Ministry also announced on December 25 that "a meeting to remove misunderstanding will be held".
North Korea's head of the Committee for Unification, Ri Son Gwon, was joined by officials from China and Russian Federation to witness the event, which included signing a wooden railroad tie and unveiling a new signboard that read "Seoul-Pyongyang".
In a separate briefing, the Unification Ministry reiterated that the event was "symbolic", indirectly pointing to sanctions in place against the North, and added that it plans to further inspect roads and railways before moving to the stage of actual construction. For a brief period about a decade ago, South Korea ran freight trains into Gaeseong, where South Korea had an industrial park, until political tensions undermined the project.