Hong Kong developers are turning their focus to the mainland's housing market, encouraged by the plans of key state-owned banks to expand mortgage lending this year. New World Development managing director Henry Cheng Kar-shun said developers would benefit from the banks' decision because it would encourage more mainlanders to buy their own flats. He said New World would continue to enlarge its property investments in the mainland, which included government-subsidised housing and conventional residential projects. Lai Fung Holdings, a mainland investment arm of Lai Sun Development, also said it would shift its property investment focus to mainland residential projects in view of the central government's drive to boost private home ownership. The Industrial and Commercial Bank of China recently said it would treble mortgage lending to 24.5 billion yuan (about HK$22.78 billion) this year, and China Construction Bank said it would increase its home mortgage business to about 30 billion yuan. They are the only two banks with official permission to provide housing loans in the mainland, although some other banks offer mortgages on residential properties in various cities. Mr Cheng said the banks' decision to increase mortgage lending indicated New World's strategy to expand low-cost housing was on the right track. It is understood the company is negotiating to develop a government-subsidised housing development in Beijing, which could further boost its mainland property portfolio. New World has accumulated a land bank of 400 million square feet in the mainland, to meet its development plans for the next 20 years. Lai Fung director Kam Kin-yat said banks such as Guangdong Development Bank had become more active in mortgage business in Guangzhou since last year. Loans were as much as 70 per cent of the purchase price, with an average repayment period of about 10 years. Banks in Guangzhou had begun providing mortgages on second-hand flats, which could further boost the residential market, Mr Kam said. Lai Fung would put more emphasis on residential development in the mainland, rather than on commercial properties, and was in preliminary negotiations to invest in a residential development for mainlanders in Beijing, he said. Properties under development by Lai Fung include the second phase of its residential project Eastern Place in Guangzhou, a commercial project at Zhongshan No 5 Road, as well as a residential project in Shanghai.