Faced with the increasing demand for quality land, and along with its metro plan to create new commercial centres in decentralised areas, the Government is studying proposals to turn Kowloon Tong - currently a low-density residential area in the centre of Kowloon peninsula - into a new-look district comprising both luxury residential and commercial elements.

The Government has conducted studies to identify potential development sites in the area and ways to enhance their investment value through rezoning.

Crown lands along the KCRC's railway network are the focus of the studies.

Their release will not only provide investors with valuable development opportunities, but will also give the Government a bonanza worth billions of dollars from sale of prime Crown land.

Kowloon Tong covers about 217 hectares of land and is characterised mainly by low-rise and low-density residential developments, together with a significant amount of institutional and community uses.

It also houses facilities for the British military, including staff quarters, a full military camp, and educational facilities for the children of British soldiers.

The military camp is to be retained as quarters for the People's Liberation Army after the 1997 handover.

A study on 'Redevelopment of Major Military Sites in Kowloon' by the Planning Department is investigating the redevelopment potential of the military areas.

The staff quarters near Kowloon Tong's Beacon Hill occupies one of three key sites being reviewed by the planners.

The three-hectare site has been designated by the Sino-British Land Commission for residential use.

The chief town planner with the Planning Department's housing and land supply section, Lau Sing, said the commission had agreed in principle on disposal of the residential site for private development.

However, details such as plot ratio for the site and the number of units would not be finalised until the study was completed in July.

Mr Lau said the Government would use plot-ratios for other developable sites in the same area as reference points. The 1993 amended outline zoning plan for Kowloon Tong shows the area around the three-hectare site is zoned for a maximum plot-ratio of between 2.1 and 3.0 times.

Using an estimated average price of about $4,000 per square foot for low-density residential projects, property surveyors said the site would bring more than $3.5 billion.

Another key site is the four-hectare block of Crown land at Suffolk Road, next to the KCR and MTR stations in Kowloon Tong.

The site, which houses the St George School for the children of British military personnel, is being considered for rezoning to commercial. The Transport Department also wants to use the site for a bus interchange terminus.

Details for such redevelopment plans have yet to be worked out.

Developers have showed increasing interest in property projects in the Kowloon Tong area.

Wheelock Properties has bought several pieces of Crown land in nearby Yau Yat Chuen, and built the Parc Oasis development, which has become a popular housing estate.

Last year, Cheung Kong (Holdings) paid about $565.38 million for the former Television Broadcasts' studio site in Broadcast Drive in the district.

The group will build a residential property. Based on a plot ratio of three, the 50,880 sq ft site has a potential floor area of about 152,640 square feet.

The planned closure of Kai Tak Airport will mean the disappearance of flight paths and associated noise problems in Kowloon Tong. Residential property prices in the area are likely to rise as a result.

Increasing passenger traffic through the district's railway stations and population growth have boosted the potential of commercial developments in the predominantly residential district.

Citic Pacific and Swire Properties jointly bought a 222,384 sq ft site next to the KCR station to develop a 1.2 million sq ft retail-office project, called Festival Walk.

The development has a plot ratio of 5.4 times, which may be a reference level for future commercial developments.

The KCRC also has noticed the commercial trend in Kowloon Tong and has expressed interest in having a commercial property above its station in Kowloon Tong.

This project, which the company says could provide more than 1.5 million sq ft of floor area, is expected to attract strong interest from developers.

Traffic congestion is a major concern for planners mapping out the zoning plan for the area.

To solve some of its traffic control problems, the Government has imposed height restrictions and limitations on plot ratios in the area, designed to restrict population densities.

The restrictions have aroused objections from many developers who complain that the restrictions reduce the potential of their developments.

The KRCR also plans to upgrade transport facilities in order to improve the flow of passengers at the Kowloon Tong station.

Media and community manager of the KCRC's east-rail section, Mabel Wan Mei-po, said the corporation had achieved its heaviest passenger traffic at Kowloon Tong station.

Traffic volume ranged from 92,000 to 95,000 per day, she said.

In view of the potential increase in passenger traffic, the KCRC had an elevator replacement plan in order to 'build high-capacity elevators to help passenger flow', Ms Wan said.

The planning authorities believe resolution of the potential traffic problems will make more new property projects possible and allow redevelopment of more old buildings in the district.