(Corrects surname to Yuen from Yau from paragraph 3 in story published on Nov 21)

HONG KONG (Reuters) - A lack of space for cemeteries in crowded Hong Kong clashes with the age-old Chinese tradition of reverence for one’s ancestors.

But one entrepreneur uses virtual reality software to reconcile the two, allowing people to honor Confucian traditions of filial obligation in the territory where it can cost up to $130,000 to store the ashes of loved ones.

Anthony Yuen’s firm, iVeneration.com, offers users the ability to create virtual headstones anywhere in an augmented reality landscape of Hong Kong, including such unlikely places as a downtown park.

Apart from the cost savings, Yuen expects his business model to appeal to more eco-conscious young residents.

“The dead are taking so much more space than those who are still alive, as those buried use that piece of land for many years,” said Yuen, as he manipulated his mobile telephone to correctly position a candle in front of a virtual headstone.

“For those who are still alive, they won’t stay on the same piece of land forever.”

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Yuen, who hopes to launch the website to the public in the first quarter of 2018, has already attracted 300 users.

Filial piety, or respect for parents and older people, is a paramount virtue in the Confucian tradition.

“We need to educate the next generation on filial piety, no matter how you show it, as long as it comes from the heart,” Yuen added. “We think the next generation might use these services for their parents.”

Alex Lee, a 46-year-old employee of a technology company, uses iVeneration to pay his respects to his departed grandfather.

“Everyone is aware the lack of land is a problem in Hong Kong and the government has been encouraging green burial,” said Lee, as he leafed through an album of family photographs.

“For me, you don’t have to go to a thing to remember those passed away, it’s all in your heart.”