Preparatory work for the pilot scheme to build subsidised and private housing into one project is proceeding as planned. Government officials are looking into the details of granting the sites mixed development, with a view to inviting developers to submit tenders later this year. Yet, it is still uncertain whether developers will be interested in taking part in the scheme. The developers are required to allocate 30 per cent of finished flats to the Government as subsidised housing for sale to eligible buyers. The price of the other 70 per cent will be fixed and sold by the developers. Though the scheme aims to improve the quality of subsidised housing by involving private developers, concerns have been voiced as to whether the mixture will affect the value of the private housing portion of the development. Subsidised housing usually is of a lower quality than private housing in terms of construction, design and management. Thus, prices of Home Ownership Scheme (HOS) flats are below those of private-sector flats, even if they are located next door. Key developers have expressed reservations about the scheme. Under the Government's proposal, it would select the 30 per cent of subsidised flats at random throughout the development. Opponents say subsidised housing and private housing cater for buyers with different income levels, lifestyles and living standards. One surveyor said: 'Buyers paying full market price for the private housing units in a mixed development may not be so happy when they find the families living next door pay much less for the same building and share the same facilities.' An executive of a property company said the sales potential of a project could be affected if part of it was for subsidised housing. 'The developer will find it difficult to price the 70 per cent [of] units it owns in the project, as the Government will be selling its 30 per cent units at much lower prices,' she said. 'I do not expect the scheme to be well received by developers, especially at today's market when property companies' profit margins are squeezed and finance costs [are] on the rise.' But proponents say the pilot scheme can make better use of the private sector's expertise to help improve the quality and appeal of subsidised housing. The Government's existing Private Sector Participation Scheme (PSPS) has been criticised for providing inferior-quality subsidised housing, as builders of PSPS projects often try to keep building costs as low as possible to maximise profits. Analysts say the Government should set stricter conditions when granting PSPS contracts to ensure the quality of finished flats. The Government has identified two potential sites for the pilot scheme - in West Kowloon and Tin Shui Wai. Analysts say the scheme might work better if developers can choose to build a mixture of subsidised and private units in different blocks on the same site. The massive Kornhill development above the Taikoo MTR Station in Quarry Bay, built in the 1980s, is a good example of such a mixed development. The project incorporated the 10-block Kornhill Gardens, a successful HOS built next door.