The harbour-front plot is back in the news, and players are now worrying about office space overkill The controversial Tamar site is once again the focus of animated debate. Experts are worried that a glut of office space will be created should the 4.2-hectare site be turned over for commercial development and a new office skyscraper be built. Last month, when Chief Executive Donald Tsang Yam-kuen refloated the plan - officially announced in 2002 but shelved a year later - to build government headquarters on the harbour-front land, there was immediate opposition from political parties and the business community. Developers are urging the government to turn over the property, one of the last pieces of prime land in Central, for private development. Ronnie Chan Chi-chung, chairman of Hang Lung Properties, said zoning Tamar for commercial development would link up the business and financial districts of Central and Admiralty, while the Democratic Alliance for Betterment and Progress of Hong Kong (DAB) sees the government benefiting from selling the Admiralty site for private development. Swire Properties, the biggest landlord in Admiralty, refused to comment on what impact the site might have on its property portfolio. Property consultants said the site, on the Admiralty promenade, had the potential to generate more than 2 million square feet of office space, roughly the same volume Two IFC generated when it was completed in 2003. Putting Tamar up for private development could mean an embarrassment of riches in grade-A office supply in 2008 to 2009. The market had a similar experience in 2003, when a sudden jump in office supply at Two IFC forced landlords in Central to undercut each other on rents. At one point in early 2003, Two IFC rents reportedly plunged to less than $20 per sq ft per month. The rate is now more than $70 per sq ft. Should the government turn Tamar over for commercial use, the site's roll-out time would be crucial to the market, said Colliers International (Hong Kong) senior associate director Wendy Lau. 'From 2005 through 2007, we are looking at a market where the supply is tight but the take-up rate is strong,' she said. 'But looking beyond that, new development on Tamar could create a lot of competitive pressure from upcoming projects in the pipeline.' AIG Tower represents the most recent new grade-A office supply in Central, and more than 95 per cent of its 360,000 sq ft of space has been leased out already. Only 119,000 sq ft of new office supply will be available next year, from Hongkong Land's Landmark East Tower. Foreseeable new office supply in Central will be in the redevelopment of Central market, which could offer about 700,000 sq ft of space. It is expected to be completed between 2009 and 2010. Colliers International research director Simon Lo Wing-fai said the commercial development of Tamar now would mean a clash with massive new office supply in Island East and West Kowloon in 2008 and 2009, by the time the project was completed. Two years from now there could be as much as 4 million sq ft or more of grade-A office supply in Central and other districts. The annual take-up rate last year was about 2 million sq ft, compared with 1.4 million sq ft in 2000, during the dotcom bubble. Mr Lo said Swire Properties was expected to complete its Westland Road commercial project in Island East in 2008. This could provide 1.4 million sq ft of office space, while the first phase of Sun Hung Kai Properties' huge office project in Union square, Kowloon Station, could see about 720,000 sq ft of office space in 2008. The second phase of the project, to be completed in 2009, could generate 1.3 million sq ft of office space. 'Some may say that new office space in Quarry Bay and West Kowloon is not the same as new office space in Central. But new office buildings in non-core areas are absorbing demand for office expansion and accommodating the back-up offices of many banks,' Mr Lo said. Simon Wong Sau-chuen, an associate director at CB Richard Ellis, believed the government would move very cautiously if it was to release the site for commercial use. He pointed out that the government had already changed its mind several times, just before it was to offer the site for sale.