SUN Hung Kai Properties (SHKP) is challenging the soft leasing market with the launch of 24 luxury flats at The Harbourview in Mid-Levels at a staggering rental of more than $55 per square foot. Analysts said it was the highest asking rent for a high-rise residential development in today's lacklustre market. Chu Man-chung, manager of SHKP's special projects department, said monthly rents on upper floors of The Harbourview would exceed $60 per sq ft. He said he expected no difficulty leasing the four-bedroom units even though the lump-sum rentals on the 2,350 sq ft apartments would amount to $130,000 a month. Estate agents said the asking rents for the project were higher than market levels and they were doubtful that tenants would be quick to take up leases. During the market's peak in the summer of 1994, agents said monthly rents of Dynasty Court units in Mid-Levels were nearly $60 per sq ft while those in Hong Kong Parkview in Tai Tam reached $58 per sq ft. Following a fall of about 30 per cent, Dynasty Court now rents for $38 to $46 per sq ft while Hong Kong Parkview's rents are about $40 per sq ft. The Harbourview is a joint venture development between SHKP and the Li & Fung Group located at 11 Magazine Gap Road. It comprises 46 units overlooking Victoria Harbour which are ready for occupation early next month. The developers earlier sold 10 of the units for an average of $13,300 per sq ft, and retained 12 other units for their own use. Analysts said even if the project was successfully leased out, the success of an isolated development was unlikely to trigger an overall market recovery. Based on the selling prices, Mr Chu said the rental yield for The Harbourview units was about five per cent, which he said was not high. Mr Chu said three units had already been leased at an average rental of nearly $58 per sq ft, or an average lump sum of $136,000 a month, to tenants mainly from banking institutions. SHKP now planned to lease seven more units at an average rental of between $52 and $64 per sq ft, targeting mainly corporate tenants, he said, adding that the remaining units would be put on lease subject to market response. Mr Chu said the decision to lease out some of The Harbourview units was in line with SHKP's strategy of retaining units in some exclusive properties for long-term investment. He was optimistic about leasing prospects for luxury flats in view of the limited supply in coming years, and he predicted rents would rise at a gentle pace. Despite the market downturn, he said SHKP's portfolio of rental properties including Dynasty Court and Hillsborough Court in Mid-Levels had witnessed a downward rental adjustment of less than 10 per cent from the peak level. Victor Liu, sales manager of Central Mid-Levels branch at Centaline Property Agency, said The Harbourview units could afford to ask for a premium rental because it was a unique development in Magazine Gap Road where new supply was near zero. 'But they are unlikely to be leased out in a short period of time in view of the slowdown in overseas companies' expansion and a cut in their housing budget,' he said.