Medium-sized developer Tai Cheung (Holdings) yesterday expressed reservations about a proposal from the Real Estate Developers' Association (Reda) for land sales to be suspended for two more years. Tai Cheung chairman David Chan Pun said: 'This is an impractical proposal.' After the company's annual meeting, Mr Chan said the proposal could be good for developers but would affect the financial strength of Hong Kong. Mr Chan said the Government was already expected to report a multi-billion dollar deficit this fiscal year because of the recession and a nine-month suspension of land sales until the end of next March. The land sales were suspended as part of the Government's measures to stimulate the economy and the property industry. 'I am afraid Hong Kong's rating will be downgraded by international credit-rating agencies if the Government decides not to sell land until 2001,' Mr Chan said. The controversial proposal was unveiled by Reda's executive committee chairman Lo Ka-shui early this month. He suggested the Government extend the land-sales freeze by two years to March 2001. Reda represents most Hong Kong developers, with representatives of the bigger companies leading its executive committee. Mr Chan said the Government could cut land supply to rejuvenate the property sector but a two-year suspension of all land sales was not a good idea. Mr Chan said Hong Kong could not escape the effects of the Asian financial crisis but his company, which was involved in office properties in outlying areas, was under less pressure than big developers in the recent economic downturn. Tai Cheung has gearing of less than 10 per cent and it has no involvement in Hong Kong's stock market, which has experienced a dramatic decline since late last year. Mr Chan said vacancy rates of Central office properties could be even higher than in fringe areas because of the glut of new supply and slower demand from international companies. This year, the company's chief source of income will be property sales from a 510,364 square foot office project in Tuen Mun, scheduled for completion early next year. Mr Chan said the project was scheduled for sale by the end of this year or early next year and it could reap revenues of $800 million to $1 billion, assuming all the floor space was sold.