Henderson Land (0012) chairman Lee Shau-kee could donate three farmland plots in collaboration with the Housing Society to build affordable homes.
But the final price tag for each flat would likely be HK$1.5 million - 50 percent more than Lee's original proposal of HK$1 million - as some land premium may be charged.
Lee earlier proposed the government waive the land premium on the plots to provide cheap housing for young people.
As well as the Housing Society, Lee has been in contact with a number of other non-profit organizations on the issue, a Henderson spokeswoman said.
He is "open to all options," she said, adding the tycoon understands the final outcome may not be entirely what he had originally planned.
Sources said the two parties were studying the feasibility of plots located in Ma Tin Pok in Yuen Long, Lam Tei in Tuen Mun and Wo Hop Shek Fan in Ling, all of which have road access.
It is understood the Housing Society wants full control of the project, and buyers won't be limited to young people.