Developers appear to be more aggressive in discussing land premiums following the relaxation of anti-speculation measures and last week's well-received auction results. Deputy Director of Lands John Corrigall said developers' interest in settling premiums was reinforced recently and several cases were under discussion, including the Tiger Balm Garden redevelopment in Tai Hang. Analysts said improved residential sales in recent weeks had made developers more willing to build up land banks. Mr Corrigall said Cheung Kong (Holdings) was allowed to redevelop Tiger Balm Garden into a residential project with a plot ratio of five times, based on the entire 90,000-square foot site. He declined to disclose details of the scheme but said land premium talks were under way. Sources said Cheung Kong must retain the former residence of media tycoon Sally Aw in the garden. The building is famous for its historical characteristics, particularly traditional Chinese mythological features, and has been categorised as a 'Grade Two' historical building. Mr Corrigall said the department had recently agreed with Cheung Kong on the land premium of a shipyard redevelopment project in Cheung Sha Wan. Cheung Kong reportedly agreed to pay a HK$250 million premium to convert the hotel portion of the site into residential space, representing an accommodation value of HK$675 per square foot. Mr Corrigall said the premium for a neighbouring shipyard site owned by Sun Hung Kai Properties (SHKP) was also discussed. The case involves changing the land use from a hotel of 456,000 sq ft to a residential area of 350,000 sq ft. He said the department had tried to bill SHKP the same premium rate on average as the Cheung Kong site but had not reached a conclusion. Premium negotiations covering another SHKP project in the same district, Olympic Station phase three, would need longer to conclude because of a dispute over the site's value, Mr Corrigall said. SHKP was also negotiating a land premium for its residential project in Kei Tei, Yuen Long, where the developer received a 3 to 5 per cent increase in plot ratio and proposed incorporating green facilities in buildings. Meanwhile, the Lands Department has firmly stated developers must pay a land premium for conversion from industrial to business use. In the practice note for business zones issued last week, Director of Lands Bob Pope said the present land administration policy, including charging a lease modification premium or waiver fee, were applicable on the newly designated business zones. The Real Estate Developers Association, including most major developers, had asked for an exemption of land premiums on such conversions. But Tony Tse Wai-chuen, chairman of general practice for the Hong Kong Institute of Surveyors, said it was reasonable to pay a land conversion premium to reflect the increase in value.