Grade A office rents are stabilising and may rise in the next few months following increased leasing activity during the first quarter of this year, according to Dominic Leung Koon-hong, managing director with Richard Ellis. There has been an overall revival in the grade A office market, reflecting pent-up demand for office space after a lacklustre 1995, according to Richard Ellis executives. Office rents slipped just 3.31 per cent in the first quarter of 1996 compared to a fall of 7.31 per cent during the final quarter of 1995. 'In some specific buildings on Hong Kong island, rental levels have either bottomed out or have even experienced marginal growth,' said Mr Leung. 'I think that rents have reached a very, very low point,' said Mr Leung. 'And I think very likely rents will go up in the next couple of months. They are definitely stabilising.' According to Richard Ellis officials, much of the improved sentiment in the leasing market was because only 1.5 million square feet of new supply was due to be released this year. At the end of March, monthly office rents in core Central, peripheral Central, Wan Chai and Causeway Bay were about $68.43 per sq ft, $59.51 per sq ft, $41.44 per sq ft and $42.43 per sq ft respectively, the agent said. Average rents for offices in Tsim Sha Tsui were $32.53 per sq ft. But Richard Ellis cautioned that the substantial projected increase in grade A office supply to a total of 13 million sq ft in 1997 and 1998 still cast a shadow on the sector in the longer term. In the luxury residential leasing sector, Mr Leung said, thanks to a general upswing in the residential sale market, rents had jumped by as much as 6 per cent during the quarter and would increase, albeit more slowly by another two percentage points by year's end. Richard Ellis figures showed that residential sale prices increased by 5 to 10 per cent during the quarter and were anticipated to climb by a further 10 per cent by the end of the year, he said. According to executive director Albert Tong Chun-fai, asking prices over the first quarter actually increased by as much as 15 per cent. Mr Tong said there had been a considerable increase in buying activity particularly of homes valued at below $10 million. He explained these units were the most sought-after properties.