Proposal could reduce heat on Housing Authority and help ease budget deficit The largest property developer on the mainland is interested in buying vacant flats in Hong Kong under the Home Ownership Scheme, a government bureau said yesterday. China National Real Estate Development, which is controlled by the State Council, had met Hong Kong government officials and presented its views on the purchase of vacant HOS flats, the Housing, Planning and Lands Bureau said. The proposal, if adopted, could ease the pressure the Housing Authority faces over disposing of the empty flats as well as provide much-needed cash to help resolve the budget deficit problem. Housing Authority members stressed that every government move to dispose of HOS flats must be made through an open tender, while property developers said the authorities should not intervene in the market again. About 25,000 HOS flats have been left vacant since the government suspended sales last November in an effort to help the battered property market. They are estimated to be worth more than $20 billion. Eastweek magazine reported yesterday that the mainland developer was interested in buying more than 20,000 subsidised flats. The company could not be reached for comment. A spokesman for the bureau admitted it had discussed the plan with the mainland company, but refused to disclose the government's position on the proposal. But a mainland property consultant said it was rare for a state-owned enterprise to do business outside its home city. Dickson Wong Hung, director of Centaline Property's mainland section, said the Beijing-based developer usually focused on middle and lower-priced residential complexes. 'It is very unusual for state-owned enterprises to do business outside their home city and it is even more unusual for them to have large business deals, such as this one, conducted outside their area. For me the only sensible explanation is that it is a government-backed decision,' Mr Wong said. Wharf (Holdings) assistant director Ricky Wong Kwong-yiu said it would not be acceptable to sell subsidised flats to a private developer. 'The government must bear in mind that what it plans to do could interfere with the market,'' he said. He said it would be better for the market if the government turned the flats into public rental units. Herman Fung Man-hei, managing director of Hon Kwok Land Investment, a medium-sized developer, said: 'It may not be good news for the property market ... Even if the developer has no intention of selling the units to hit the housing sector in short run, the sizeable supply of units, if used for guesthouses, would deal a blow to the hotel industry.'