The blaze, the world's deadliest residential building fire since 1980, killed 168 people and left thousands homeless in November at Wang Fuk Court, a high-rise apartment complex in northern Hong Kong.

Displaced residents have urged the government to come up with resettlement options, with some expressing hopes for the estate to be rebuilt.

Deputy Financial Secretary Michael Wong said Hong Kong authorities will spend up to HK$6.8 billion ($870 million) to acquire property titles from flat owners, either in cash or as part of a flat swap.

"The scale of the disaster is unprecedented, and currently there is no effective market mechanism to assist affected households," Wong said at a press conference.

Just over 1,700 owners would receive an offer of between $441,000 to $650,000, depending on their flat's size.

Wong said the fire was a "special case of an exceptional nature" that warranted government intervention to avoid the flats becoming worthless.

Wong said it was "not appropriate" to rebuild the complex because it would take at least nine years and instead would be torn down to build a park or other community facilities on the site.

Seven of the estate's eight towers suffered "irreversible" internal damage in the fire, while one building was left largely unscathed.

Only nine percent of flat owners surveyed insisted on redevelopment on the same site as the only option, Wong added.

The buybacks will use an estimated $510 million in taxpayer money, with the rest coming from a relief fund.