If the government decides to buy the mansion, surveyors estimate that more than HK$400 million should be paid to compensate the owner. The architect who recently surveyed the site said restoration would cost more than HK$10 million.

A spokesperson for the Ombudsman said the office was watching the issue closely to see if maladministration was involved.

The Sun Yat-sen Museum, which opened early this year, was surrendered by the Church of Jesus Christ of Latter-day Saints in 2004 at a cut-rate price of HK$53 million. More than HK$90 million was spent on restoring the building.

The source said the government would complete an assessment report showing the 'wounds' of the mansion within two to three months.

Pang Shiu-kee, an experienced surveyor, said the site of the mansion, on Stubbs Road in Mid-Levels, could be sold for HK$15,000 per sq ft at prevailing market prices.

With a plot ratio of 0.5 and a maximum gross floor area of over 26,000 sq ft, the land could be sold for about HK$400 million, which is close to what the new owner paid in a deal completed in the past few months.

The government source said there were complicated issues involved when considering preservation options. It was far from clear, for instance, if most people in Hong Kong would be willing to pay such a large sum of money to save the mansion. If it was declared a permanent monument, the acquisition process should respect private property rights and be fair to the owner, the source added.

Philip Liao Yi-kang, the architect hired by former owner Yow Mok-shing, examined the exterior of the mansion yesterday.

He estimated a fee of more than HK$10 million to restore it. 'The stylish fences surrounding the swimming pool are still there, but most decorative items were destroyed.'

He said the decorative items could be remade in the mainland city of Foshan , where delicate handicrafts are produced. He urged the government to use the mansion properly if it was restored.

'Allowing development on site is a possible option, but it has to come with stringent development controls. New buildings should not be high or located close to the mansion. Otherwise, the atmosphere would be destroyed,' he said.

'Historic buildings should not be an excuse for purely commercial developments,' he added.

Mr Liao suggested the mansion could be run by a non-profit-making organisation after its restoration, and said it should be open for public enjoyment.

Prime property

One estimate values the site of the mansion at HK$15,000 per sq ft

But surveyor Charles Chan Chiu-kwok says with full redevelopment allowed this could rise to $20,000