He expressed concern that low land prices would be negative for the market. Reda is set to discuss its response tomorrow.

Under the scheme, the Government releases land on to the market when a developer agrees to pay a minimum price. The system was reintroduced to supplement the normal scheduled auction and tender system in early 1999 after a nine-month land-sale suspension.

SHKP vice-chairman Thomas Kwok Ping-kwong expressed strong reservations over Mr Ho's proposal, indicating that the land application system was fair and involved less government intervention.

Speaking after attending the naming ceremony for Union Square - a 12 million square foot development in Kowloon Station - Mr Kwok said: 'The three of us, Sun Hung Kai, Hang Lung and Wharf, all agree that the system is transparent and the fairest way in the market.

'It presents all land supply information to everyone. All developers, whether they are major or small, can add to their land reserve through participating in the system. The system is working very well.'

Mr Kwok's comments were echoed by Hang Lung chairman Ronnie Chan Chi-chung, who said he thought the application system was reasonable and fair.

'I think the system is very suitable to the Hong Kong market. It is difficult to speak and think for the other developers, but I suppose not everyone wishes to stop applying for land from the reserve list,' Mr Chan said. He added it was normal for developers to have different views on the issue.

Wharf chairman and chief executive Gonzaga Li Wei-jen said he agreed with land reserve system's fairness.

The Government has sold nine sites through the application list since 1999.

The SAR's largest developer, Cheung Kong (Holdings), bought or was involved in the four biggest sites sold - including two Hunghom commercial lots sold in August and October.

The application-list system has attracted much criticism and debate.

Last year, Cheung Kong executive director Justin Chiu Kwok-hung criticised it for lacking transparency.

During the market doldrums last year, developers lobbied for the transfer of large sites to the application list. In this financial year's land-sale programme, most major sites have been put on the list.

Analysts and critics said the system effectively allowed developers to influence land supply and decide how much land came on to the market and when.

SHKP, which is Hong Kong's second-largest developer, is undertaking a large portion of the Union Square development. Wharf, Hang Lung subsidiary Amoy Properties and USI Holdings are involved separately in other phases of the project.

Meanwhile, Mr Chan said there were positive signals over the past few weeks on the property market in the wake of increasing transaction volume in some new developments.

'Personally speaking, I don't think property prices will drop further in the future,' he said.

Wharf assistant director Ricky Wong Kwong-yiu said 400 units at Sorrento at Kowloon Station had been sold through an internal sale, with proceeds of between HK$1.7 billion and HK$1.8 billion.

A property investment fund was also negotiating for 20 to 30 units for HK$100 million, he said.

Mr Wong said Wharf was still studying the details of three Shenzhen residential lots for public auction next month and had not yet decided whether to take part in bidding.

SHKP manager Victor Lui Ting said SHKP had sold about 1,500 flats in the past two to three months.

Sales of its Yuen Long and Tseung Kwan O residential developments had generated about HK$3 billion in proceeds, said Mr Lui.