Since November, the Lands Department has asked developers to pay an additional land premium if they planned to include food and beverage outlets in their retail developments in cases where the land lease of these properties was restricted for such use.

Before the new measure, owners of shopping malls and retail outlets were required to pay only a standard administration fee of $20,000 for lease modification.

K.Wah Real Estates property manager Quinly Wan Tsz-mei said the change would discourage developers from redeveloping a building into a hotel or an entertainment centre.

'We have no idea how much it [the land premium] will cost to relax the usage restriction. It will increase developers' risks and costs,' she said.

Victor Lui-ting, executive director of Sun Hung Kai Real Estate Agency, urged the government to carefully reconsider the new measure.

Sites on old leases are restricted from operating food and beverage outlets unless the government grants a permit to landlords.

Developers and individual owners have to apply for lease modification if they plan to lease retail space for coffee shops or dim sum restaurants.

Lanbase Surveyors director Chan Cheong-kit said it was difficult for developers to estimate the size of retail space to be set aside for food or beverage use, which made it more difficult for them to predict the amount of land premium they would have to pay the government.

Under the new procedure, developers or landlords have to pay a land premium for permanent conversion, while individual owners can pay a waiver fee for a short-term change in use.

Mr Chan believed many landlords would be affected by the new move, though it was hard to determine how many exactly.

Albert So Surveyors managing director Albert So Chun-hin said the new policy was reasonable.

'The question is how the land premium will be evaluated,' he said. 'Disagreement on land premiums payable between the government and developers will further delay a project.'

The Lands Department was unavailable for comment yesterday.