Sun Hung Kai Properties (SHKP) will sell the first two of its 42 luxury flats at No 3 Repulse Bay Road by closed tender, according to a company announcement. The reserve for units A and B on the 16th floor of the development has been set at $18,800 per sq ft. The two flats measure 2,021 and 2,161 sq ft. Agents said the flats probably would fetch more than $20,000 per sq ft, or $41-$47 million per unit. Some agents said the developer was putting two flats on to the market in order to test market sentiment considering that transaction volumes and prices had fallen following the recent interest rate rise. 'If they had put the flats on the market in December they could have sold out the project,' one agent said. However, SHKP yesterday said it had never intended to sell all of the flats and would keep the majority for leasing. 'Most of the units will be retained for rental, with a handful of the units being offered for sale,' said Victor Lui Ting, property investment manager with SHKP. Mr Lui defended the firm's decision to sell the flats by closed tender, saying: 'As only two units have been offered for sale, and in light of the vast number of inquiries about the flats, the developer has opted for sale by tender as the fairest method for all potential buyers.' Charles Wheatman, residential director with Jones Lang Wootton, the sole agent on the project, said SHKP had decided to sell an initial two flats to gauge market response. 'We want to see how high the price will go,' Mr Wheatman said. 'We don't know what people will think of the product.' After the tender, the developer is likely to release some units through internal sales. JLW officials believed that SHKP would retain 50 to 60 per cent of units for leasing, which could begin in June. Monthly rents could reach $150,000 to $160,000 per unit. Agents agreed, saying that the site provided some of the most stunning views of the sea and of the south side of Hong Kong Island. The development has a two-storey residents' clubhouse with a wide range of facilities including swimming pool, a function room, billiards room, children's games room and play area, gym, sauna and steam room. The 22-storey tower has a total floor area of 92,921 sq ft. There are also two penthouse duplexes measuring 4,035 sq ft and 4,329 sq ft. Agents estimate that car parking spaces available with each unit will sell for about $1.3 million each. Tenders close at midday on May 13, and Mr Wheatman said he expected up to 500 bids.