The HK$8.9 billion project is expected to boost property prices in the area and ease traffic congestion.

The MTR Corp says the air-conditioned corridors, escalators and lifts are an important feature of the 3km line, which will be completed in 2013 at the earliest.

Apart from the trains, the rail operator will also be responsible for relocating the Kennedy Town swimming pool at the waterfront. The site will become Kennedy Town station.

The David Trench Rehabilitation Centre in Eastern Street will be relocated to the old High Street police station - a grade three historical building - to make way for the station at Sai Ying Pun.

Jim Chi-yung, a Transport Advisory Council member who teaches at the University of Hong Kong, said the network would expand the catchment area of the rail and possibly encourage richer residents to abandon their cars.

'It clearly is MTR's intention to capture the market of Mid-Levels residents,' Professor Jim said, welcoming the promotion of mass transport.

He said expanding the rail system would bring huge benefits to more than 10,000 university students and staff, and help cut road congestion.

The rail is expected to serve an area with a population of 140,000 by 2016.

Kam Nai-wai, a Central and Western District councillor, said while the rail line would boost property prices and ease traffic congestion, the runaway redevelopment projects in the district were cause for concern.

'It will be hard to conceive what the already densely populated district will be like if there is a further relaxation of the plot ratio at those redevelopment sites.'

He said developers had been buying out properties in the district, forcing some low-income groups to move out.

'Gone are the days when an old flat could be rented for HK$3,000 to HK$4,000 a month in Sai Ying Pun,' he said.

Shum Hing-wo, head of the Kennedy Town branch of Centaline Properties, said property prices had already gone up by 30 to 40 per cent since the government gave approval for the project. He said the price increases were fuelled by a tide of acquisition of old properties by developers and investors.

At least six redevelopment projects were being planned or constructed, with the largest being the Urban Renewal Authority's scheme in the First and Second Street, which would provide up to 500 flats.

Mr Shum said he was not worried about higher density in the district.

'If there were no big development projects or no more people in the district, putting in the underground rail would be a waste.'

What drove up the costs?

Moving David Trench Rehabilitation Centre

Building 2km underground walkways

Installing twice as many elevators for disabled

Moving Kennedy Town Swimming Pool

Reprovisioning Centre Street Cooked Food Market at same site

Using former abattoir site as works area

Using Western District public cargo working area as temporary barging point

Moving public toilets

SOURCE: MTR CORPORATION LIMITED