Ten new pieces of land will be added to the government's "land bank" for property developers to apply for and develop into hotels, Financial Secretary John Tsang said in his budget address yesterday.

To aid tourism, he said he will also recommend the government waive the hotel-accommodation tax permanently.

The moves, which are estimated to provide space to build between 9,000 and 11,000 hotel rooms and reduce the cost of hotels, will help boost Hong Kong's status as an international exhibition and tourism hub, businessmen and legislators said.

A spokesperson for the Federation of Hong Kong Hotel Owners welcomed the government move, saying it would attract more investors to pour money into building quality hotels that will enhance the strength of the local hospitality business.

"This will certainly address the shortage of hotel supplies," said Antonio Wu, head of investment and retail services for Colliers International.

Hong Kong is under mounting pressure to maintain its status as a regional tourism hub, as neighboring Macao is narrowing the gap in terms of tourist visits.

With its booming gaming sector, Macao received 27 million tourists last year, just 1 million fewer than Hong Kong.

A lack of hotel rooms was attributed as one of the factors slowing the development of Hong Kong's tourism sector, so, "the addition of 10 sites could help Hong Kong beef up its competitiveness", lawmaker Howard Yeung said.

In another move to boost land supplies in Hong Kong, Tsang proposed to relocate three government office buildings in Wan Chai to new districts such as Kai Tak Development Areas and Tseung Kwan O, paving the way for auctioning off the three office buildings to developers.

But a government spokesperson said later yesterday that the government is still studying the feasibility of the relocation in consideration of supply and demand for grade-A offices in the central business district. "This is another good move, as Hong Kong has a stark shortage of offices," Wu said.

Hong Kong was ranked the second-most-expensive business district in terms of office rentals last year, behind only London's West End, according to a DTZ report.

Grade-A monthly office-rental prices averaged $213.20 per square foot in 2007, a year-on-year increase of 37.5 percent.

That has prompted businesses to urge the government to boost office-land supplies in Central.

UBS Co-head of Asian Property Research Eric Wong suggested the government change some the West Kowloon sites in its land bank to commercial uses in order to resolve the shortage of commercial offices.

(HK Edition 02/28/2008 page2)