The largest movie studio to be built in Hong Kong has been given the greenlight to begin construction at the end of the year.

Shaw Brothers has been waiting for a permit to jointly develop two pieces of land on which to build the state-of-the-art Movie City. The first piece of land, 30,000 square metres, was acquired when a consortium led by Shaw Brothers won the tender in August, 1998. The second plot, 15,000 square metres, was acquired in September, 2000.

Further delays were caused when the Television and Entertainment Licensing Authority (TELA) asked the consortium to build a special storage facility for pyrotechnics and explosives. The consortium objected on grounds of security and TELA later withdrew its request.

The construction of a mass transit railway, which will run underneath Movie City, also caused delays.

"It's not a problem anymore. We just need to see how to mitigate the vibration and sound effects that will come from the subway line," said Lawrence Lau, group financial controller of Shaw Brothers.

Lau says an administration building and post-production building will be built first, followed by sound stages and supporting facilities.

Managing director Mona Fong Yat-wah said $109m (HK$850m) would be invested in the construction and $38.5m (HK$300m) in equipment and facilities.

Media tycoon Sir Run Run Shaw's Shaw Brothers own 35% of Movie City, a consortium which includes Media Asia Group, Chinastar Entertainment and Mei Ah Film Production. The studio is expected to be completed in 2004.