INDUSTRIAL east Kowloon could see the rise of luxury, Mid-Levels-style housing districts following the closure of Kai Tak airport, property specialists say. Kai Tak and its surroundings are due for a massive facelift under government plans designed to turn it into a vibrant commercial hub. The large-scale redevelopment projects will drive the entire area decidedly upmarket, property experts say. The outskirts of Kai Tak - stretching from Hunghom to Lam Tin on the northeastern tip of the airport - are currently dominated by mass-market housing developments. As industrial zones are flattened and an increasing number of Grade A offices spring up, the area will see the development of middle-class and even luxury residential districts. Underpinning the changes to Kowloon is the launch of a $220 million government feasibility study into the planned redevelopment of southeast Kowloon, which recently received Legco approval. The Government had earlier revealed plans for a $20 billion facelift for central Kwun Tong. At Kai Tak, the Government's blueprint is for a low-rise business park giving way to light industrial units on reclaimed land where the nullah currently runs between the existing runway and Kwun Tong. The airport itself will make way for 600 hectares of middle-class homes and maybe a small amount of light industry. Isabel Michie, residential director at property consultants First Pacific Davies, said new residential districts in much of eastern Kowloon could rival Mid-Levels, provided there was sufficient changeover from industrial useage to prime commercial development to attract upmarket housing projects. Ms Michie said Kwun Tong would be a perfect spot to build luxury serviced apartments and housing estates. These would accommodate business executives and other professionals working in the new office blocks which are expected to be built. Laguna City-style units - which are smaller in size and more luxurious than most comparable flats currently on the market - could become the most popular type in Kowloon at the start of the next century, when the redevelopment of the eastern side of the peninsula would come to fruition. Ms Michie said this possible future preference for smaller flats would continue a trend begun in the early 1980s. The vogue for old, colonial-style 4,000-square-foot apartments, such as the now demolished Peak Mansions, gave way to an interest in 900 to 1,300 sq ft units in newer developments like Hillsborough Court in Mid-Levels. The upgrading of Kai Tak and east Kowloon was a natural step in the eastward redevelopment of the peninsula which had started with the revamping of Tsim Sha Tsui East and should continue as far as Lam Tin and Junk Bay. Kowloon's redevelopment will speed up when the airport closes and building height restrictions are removed. Neil Palmer, Kowloon commercial property director at First Pacific Davies, said: 'There is definitely a need in Kowloon for higher quality residential space.' The recent Government land auction for the Cox's Road residential site in Kowloon was a success because there was a lack of luxury accommodation in the area of the type which could be found on Hong Kong island, he said. Property experts said the equally successful subsequent auction of the luxury Kings Park Rise site in Ho Man Tin, in March, reflected optimism in the future of the residential market in Kowloon. Mr Palmer said nodes of Grade A office developments were appearing in eastern Kowloon and there were plans for more in the Government's Kowloon East Redevelopment Plan and at Kai Tak. Among them, Cheung Kong Holdings and China Light and Power have announced plans to build flats, shops and offices on the 6.42 hectare site of the former Hok Un Power Station in Hunghom in January. Michael Levene, director of planning at architects RMJM, said predominantly middle-class housing in high-rise blocks on podium shopping centres was likely to be built in east Kowloon. Although new housing in the area will be catering to middle-class homeowners, Mr Levene said most residential districts would look more like Taikoo Shing than Mid-Levels. He said he hoped the Government would avoid repeating the mistakes it made on Hong Kong island with its planning for Kowloon, so as to improve the peninsula's environment. For example, he urged the Government to build promenades on waterfront areas rather than roads and other infrastructural projects. He warned that Kowloon City could prove difficult to redevelop, because its roads and sewers were already at saturation point.