A 9.8-hectare, subsidised-housing site in Tuen Mun will be converted for private development following the Government's scale-back in the Home Ownership Scheme (HOS). The So Kwun Wat site was to offer 4,900 subsidised flats under the Private Sector Participation Scheme (PSPS), due for completion in two phases by 2004. A Housing Authority official said it was finalising details of the So Kwun Wat site with government departments. The land eventually would go to the Lands Department for public auction or tender for private development, she said. More subsidised-housing sites were expected to be converted to private residential use as the Government trimmed production in favour of offering loans to buyers. The large supply of subsidised flats had been criticised by industry leaders for competing with the private sector and had been blamed for the poor property market. Last month, Financial Secretary Donald Tsang Yam-kuen promised HOS sales would not exceed 20,000 new units a year in future, leaving the private sector to play a bigger role in housing production. The Housing Authority official said some residential sites allocated for public-sector flats, including those under the PSPS, would be put on the private market. The Government had said more loans would be offered to replace the direct provision of subsidised housing. PSPS flats are developed and financed by private contractors. PSPS and HOS units will be sold to lower-income families at discounted prices. According to the four-year, land-development programme announced in March, the Government has reserved 12 ha for PSPS housing. The So Kwun Wat site could have been released for sale under the original schedule. The change in land use of the 9.8 ha site means a substantial cut in PSPS production. According to the original plan, the two-phase development was to provide subsidised flats for up to 15,680 people. Surveyors estimated the site could provide a gross floor area of more than three million square feet if used for subsidised housing, because the Government usually allowed a higher plot ratio - up to three times - for public development. The general plot ratio approved by the Town Planning Board for private-housing developments in So Kwun Wat was between one and 1.3 times. The future of PSPS is in question because of the scale-back in HOS production. Analysts said developer interest seemed to be dwindling. The Government has failed to sell any of the three PSPS sites scheduled for this financial year. The three lots - in Kwai Chung, Sha Tin and Tseung Kwan O - cover a total of about 6 ha and could provide 7,300 units. In September, the Government took the sites off the tender programme and put them on the application list. This meant they would not be released for sale until developers expressed interest and a minimum purchase price was agreed, effectively delaying the sale. S K Pang Surveyors managing director Pang Shiu-kee said the Government aimed to axe the PSPS programme. But, he said, there would be a large supply of private flats in So Kwun Wat in the next few years. The PSPS site in So Kwun Wat should increase supply of private flats after the change of land use. Mr Pang said the site should be subdivided into smaller units if it was put up for tender or auction for private development. If not, small developers would not be interested in bidding because of the high cost of the site and the poor market. Sun Hung Kai Properties and Henderson Land Development want to enlarge the size of residential developments in So Kwun Wat. Nan Fung Development is building a project comprising six 10-storey apartment blocks and 32 low-rise blocks on a site acquired at public auction last year. USI Holdings and Manhattan Realty are jointly building a 230,000 sq ft low-rise, resort-type residential development in the area. They also bought their site at auction last year. The Government has four residential sites in Tuen Mun available for sale on this financial year's application list for private development. They include a 1.5 ha site and a 1.66 ha site, both near Hong Kong Gold Coast in So Kwun Wat.