Japanese and Hong Kong capital is expected to be put into a housing estate in Shanghai that the government is using as a pilot for new construction methods. Officials from Putuo district, where the Wan Li estate will be, said discussions were being carried out with a consortium of Japanese and Hong Kong investors. The project would cost 3.6 billion yuan (about HK$3.34 billion). Shanghai Putuo district government deputy magistrate Bai Wenhua said the estate was one of two to be developed using foreign funds. He said Wan Li estate would be built on a 100-hectare site in the district and would include mainly low-rise residential blocks. The estate would house about 60,000 residents and have a total floor area of 19.4 million square feet, Mr Bai said. Three classes of apartments would be built in the estate - low-cost units for the needy, resettlement flats for residents affected by demolition and flats to be sold to mainland citizens at market rates. The other foreign-funded project was the San Lin estate in Pudong, which would be built by a Singaporean consortium. The consortium signed an agreement with the authorities last week. San Lin estate would be built on a 4.1 square kilometre site in four phases spanning 10 to 15 years where the first phase, expected to cost US$143 million, would be completed in 1999. 'The difference between the two projects is that unlike San Lin, the planning and construction of Wan Li estate will be undertaken by us,' Mr Bai said. San Lin and Wan Li estates were being developed using the Shanghai government's policy introduced last August of attracting foreign investors to develop low-cost housing, guaranteeing them areturn on investment of 15 per cent. The two projects are part of the four model estates the government wants to develop using new construction, planning and design concepts, in a bid to raise housing standards in the city. The other two pilot estates in the north and south are in Baoshan and Minhang districts. One of the poorest districts in Shanghai, Putuo has about two million sq ft of old houses in need of demolition. in order to improve living conditions of some 35,000 households. City officials intend to increase concessions made to investors in order to attract much-needed foreign funds for the redevelopment project. Mr Bai said foreign investors could develop housing for the foreign market in the district but if they failed to sell the properties, the district government would buy them and help the investors develop them. The capital obtained from investors through leasing of land could be used to demolish old houses and resettle residents. He said it cost between 150,000 to 200,000 yuan to resettle one household in the district. Hong Kong's Sun Hung Kai Properties had met officials to discuss redevelopment projects in Putuo district, he said. Mr Bai said land lease costs were 20 per cent lower than those in other districts in Shanghai.