There has been a reduction in the developers' risk for the massive Kowloon Station residential-commercial development because of the lower-than-expected HK$5.56 billion land premium. The proposed development will provide 5.4 million square feet of gross floor area. It is the last two phases - five and seven - in the station development and will cost an estimated HK$25 billion. The estimate includes land premium and construction. Tenders were called on Friday after the Mass Transit Railway Corp received the premium offer from the Lands Department. Bidding closes next month. A developer said the asking price was below the market value. 'The price is surprisingly low compared with other developments in the Kowloon Station,' he said. 'We have no idea why the Lands Department has become quite reasonable, considering the strong attitude it adopted in recent land premium cases.' The HK$5.56 billion represents an accommodation value of HK$1,020 per square foot. Early this year, more than eight major developers had expressed interest in the development including Henderson Land Development, Sun Hung Kai Properties, Cheung Kong (Holdings) and Hang Lung Development. Surpass Property Strategy Consultant managing director Charles Lai Chin-pang said the land premium was reasonable considering it would take years to complete the development. 'The development is more risky than other ordinary projects because of the higher investment cost and interest expenses,' he said. The premium offer was slightly lower than the HK$5.5 billion for Sun Hung Kai Properties and Henderson Land Development on their 3.5 million sq ft joint venture commercial project covering phases two to four at Hong Kong Station, in Central. The premium for Hong Kong Station representing an accommodation value of HK$1,545 per square foot. Mr Lai said the different locations determined their difference in land premium. One was in a prime office area, the other in a newly developed reclamation area. 'It would be unfair to compare the two projects directly,' he said.