When private land has to be acquired for public purposes, usually to implement public works projects, it may be acquired either by negotiation or by resumption under the relevant ordinances. The ordinances provide for payment of compensation both for the value of the property resumed as at the date of acquisition and for business loss suffered. If agreement cannot be reached on the amount of compensation, either party can refer the claim to the Lands Tribunal for adjudication. As an alternative to statutory compensation, there is in operation a system of ex gratia zonal compensation to provide a simplified assessment procedure for agricultural land acquired in the New Territories to enable the early release of compensation payments to facilitate clearances.

A total of 84 202 square metres of private land, comprising 83 568 square metres of agricultural land and 634 square metres of building land, were acquired in 2004 to provide land primarily for implementation of road projects, river training projects and school development projects. The road projects included improvement works to Tung Chung Road on Lantau Island, improvement of access road at Kwan Tei North in Fanling, construction of a new access road at Sha Kok Mei Village in Sai Kung, improvement of existing roads in Cheung Chau Old Town and construction of emergency vehicular access at Luk Tei Tong, Mui Wo. The river training projects included the rehabilitation works at Sha Po Tsuen and the village flood protection works for Sheung Cheung Wai in Yuen Long. The school development projects included the construction of two schools at Area 31 in Sheung Shui and three schools at Area 13 in Yuen Long. In 2004, $620 million was paid by way of compensation.

The Lands Department was also involved in the resumption of land for implementation of urban renewal projects undertaken by the Urban Renewal Authority and the Hong Kong Housing Society. During the year, compensation totalling $64.6 million was paid to owners of 86 resumed properties affected by 11 urban renewal projects in various locations, namely Mong Kok, Yau Ma Tei, Tai Kok Tsui, Sham Shui Po, Wan Chai, Kennedy Town, Tsuen Wan and Tsim Sha Tsui.

The Lands Department also continued to resume and clear land for the Kowloon- Canton Railway Corporation for implementation of its new railway projects. By year-end, $79 million was paid out by way of compensation in respect of the West Rail project and $26 million for the East Rail Extension project which included the Sheung Shui-Lok Ma Chau Spur Line and the Hung Hom to Tsim Sha Tsui Line.