SPECULATION that the Government intends to make a massive reduction to plot ratios in Kowloon has alarmed the property industry, which says it stands to lose millions of dollars if plans go ahead. The Government is planning to gazette outlying zonal plans on Friday. But according to industry sources, this would lead to a reduction of plot ratios from 15 to 12 for commercial buildings in Kowloon. Plot ratios limit the total amount of floor space a developer can build on a site. According to the plot ratio formula, the total floor space for a building has to be within a defined ratio of the square footage of the site itself. They can vary from building to building depending on location, street position and other factors. Grace Ng, information officer at the Lands and Works Department, would neither confirm nor deny reports of plans to reduce plot ratios. But she admitted it was a major feature in the plans to be gazetted. Neil Palmer, head of the Kowloon office for estate agents First Pacific Davies (FPD), said that whereas now a 10,000-square-foot site with a plot ratio of 15 could be developed to include 150,000 sq ft of floor space, such a property would lose 30,000 square feet of floor area if the plot ratio was reduced to 12. Consequently, if a building in Mongkok was to have its ratio reduced from 15 to 12, the value would drop about $180 million, he added. The plot ratios in Kowloon varied from 12 to 15 depending partly on the proximity to the airport. Mr Palmer said a reduction in the plot ratios would have ''very serious consequences'', for developers. He said developers who owned properties in Kowloon with plot ratios between 12 and 15 would be angry if the speculation turned out to be true. ''If someone had bought a site in the last two months, they would be badly affected,'' Mr Palmer added. The plans come at a time when a number of property owners in Kowloon have started to build higher, such as the 30-storey extension to The Peninsula. Reduction in plot ratios would have a particularly strong impact on Tsim Sha Tsui. According to senior town planner Heidi Chen, most commercial buildings in Tsim Sha Tsui had a plot ratio of 15. Richard Watton, associate director at Richard Ellis, said at least one developer with a property in Tsim Sha Tsui had submitted a proposal this month to rebuild within the full limits of the existing plot ratio of 15 before changes were made. Paul Anderson, Richard Ellis' industrial department manager, said that in some areas such as Kwun Tong, the plot ratios may actually increase from 11 to 12 if the reports were true. A planning professional said he had received an ''enormous number of phone calls every day'' from concerned clients. He said that Kowloon developers with ''millions and millions in existing investments will be concerned because some of this [investment] is based on what is achievable in redevelopment''. Lands and Works Department's Ms Ng said the Government's plans incorporated recommendations of the Kowloon Development Study to be published today.. One estate agent said the Government had been looking into the density of development in Kowloon because the area's ''infrastructure cannot cope''. The timing of the Government's gazetting also came under attack from Mr Palmer, who believed it could wait until next year at least, when the West Kowloon reclamation project was completed, providing alternative land for development. However, some estate agents supported the reduction of plot ratios. Karen Wong, joint managing director of estate agents Colliers Jardine, said a reduction was long overdue because more emphasis should be placed on improving infrastructure. She said plot ratios should be reduced on Hong Kong island as well as Kowloon for areas such as Mid-Levels, because of traffic jams and congested development. A reduction in plot ratios could even add to the value of a property because it would be a step towards reducing the congestion in the local area and ease pressure on infrastructural amenities such as roads and MTR, she said. ''I don't know how the Government did not anticipate this [pressure on infrastructure] in the first place,'' she said. Mrs Wong did not believe developers with investments in Kowloon will necessarily lose out, because property prices are rising. Moreover, a building's value was not only dependent on the site but other factors, including quality of local amenities. and environment, she said.