Chinese Estates Holdings will spend up to $1 billion demolishing the 39-year-old Tung Ying Building in Nathan Road and turning it into a commercial complex full of glitzy shops.

Work will start next year and yield about 400,000 square feet of commercial space. The redevelopment has been estimated to cost between $800 million and $1 billion and will take about three years.

A source told the South China Morning Post last week the decision to demolish the 17-storey building, which Chinese Estates bought in 2002 for $1.1 billion, had been prompted by a consumer spending boom and the property market revival.