GREAT Eagle Holdings' achievement of a 73 per cent growth in its 1994 full-year earnings seems to bring a breath of fresh air to soothe its recent suffering in the equity market. This property investment firm suffered with other property stocks, when compared with other equity sectors under such an adverse climate in office and residential sectors. In the past 12 months, the stock has under-performed the main Hang Seng Index by 41 per cent, falling 58.7 per cent, while the property sub-index has under-performed the main index by 14 per cent, falling 40 per cent. The main index fell by 29 per cent over the period. Shares in the company plunged about 7.5 per cent to $2.775 over the last month, with estimated discount to its net asset value up to 50 per cent. The latest result is no doubt to prove that the company's recurrent income, mainly derived from rentals in office portfolios and partly from its luxury developments, has not yet been dampened by the present price correction. However, those investors with keen insight into the real estate market will not be laughing at the short-term earnings because the negative impact of the depressed real estate market are predicted to be reflected on the company's earnings in 1996 and the years beyond. With the bulk of the revenue derived from office rents, the company's fortunes will be closely linked to the performance of the commercial market over the next few years. It is widely believed that rents in the office sector will fall slightly in 1995 as more tenants consider relocation to outlying areas or expand in other commercial centres in the region to reduce occupation costs. Although very little new supply is forecast in the main office areas during 1995, vacancies are expected to rise as tenants review their space requirements in the light of the high operating costs in Hong Kong. The prime office sector is expected to see rents and prices softening in future. It is not surprising that Great Eagle's potential earnings growth was adversely affected. With an unexciting growth potential, property analysts said the short-term positive results of Great Eagle would fail to woo many of the investors back to the company or in the whole property sector. Share prices of property stocks, which account for at least 45 per cent of the market, dropped significantly owing to price wars because investors were worried about sliding corporate earnings. Over the past week, the property sub-index plunged 6.54 per cent and it closed at 12,060.89 points on Monday, despite posting a slight technical rebound yesterday. Major property developers and investment firms saw their share prices plummet nearly 10 to 15 per cent over the last month. Meanwhile, the situation seems likely to persist for a while as the bearish sentiment in the property market continues. The Government's measures to drive speculators out of the market and the series of interest rate increases since March last year have also affected the property market.