The agreement reached with the developer of the Hunghom Peninsula to modify the conditions of sale is a satisfactory solution, Secretary for Housing, Planning & Lands Michael Suen says.

Speaking at two radio talk shows this morning, Mr Suen said the premium of $864 million the developer has to pay to the Government for the lease modification is the result of negotiations concluded by an independent mediator.

Mr Suen said, following the change in housing policy in November 2002, the Government has explored several possible options to dispose of flats built under the Private Sector Participation Scheme.

One of the options was to buy back these flats and put them up for sale in the open market, he said.

However, this option is constrained by the fact that the site is owned by the developer.

This is complicated by the co-existence of the developer's commercial facilities and carpark spaces within the development, he added.

Not feasible for Gov't to convert flats

It was also not feasible for Government to buy back these flats for conversion into public rental housing, as these flats are excessive in size and their standards far exceeded that of the existing rental units, he said.

The agreement now reached is the best solution to the problem, he stressed.

With the experience gained from the deal, the Government will be able to obtain a better price when it came to the sale of another Private Sector Participation Scheme project situated in Ngau Chi Wan.