Small private investors in Hong Kong will increase their interest in British properties in the next two years, according to London-based residential property management company, Capital Asset Management (UK). They would be attracted by the stability of the residential market, the agency said. Managing director Tim Rooney said the demand would be encouraged by the financial crisis and the economic slowdown in Hong Kong and neighbouring countries. Those negative factors had dampened Hong Kong investors' interest in the Asian property market and prompted them to consider a global portfolio, he said. Paul Ma, Hong Kong Real Estate Agencies Association first vice-chairman, agreed that the London property market was more stable than Hong Kong's. He said some Hong Kong buyers had bought British properties in preparation for their migration plans. Associate director of Jones Lang Wootton's international division Clive Chan said the possibility of reductions in interest rates would further boost Hong Kong investors' interest in the British market. Mr Rooney said Hong Kong people were looking for apartments at an average price of GBP200,000 (about $2.5 million) each. Investors were not looking at short-term profits but a good return in about three to five years' time. Hong Kong investors would be more selective in buying and returns and locations would be the criteria for them in choosing properties. Mr Rooney predicted investors would look for properties in districts with well- developed infrastructure. To consolidate the company's position in the local market, he will be visiting Hong Kong next week. According to the latest residential lettings report by Black Horse Agencies, letting property was a worthwhile investment, with returns of up to 10.6 per cent per annum possible. Across the country, rents had remained steady and there was a big demand, particularly by people 25 to 30 years old, for quality properties. The report says there is a shortage of property to rent across the country and this mirrors the residential market where there is a shortage of homes for sale. This shortage of rental property is occurring for two reasons - the decrease in supply of homes available to let and an increase in demand. With house prices continuing to increase and interest rates likely to come down in the medium term, letting homes could offer sustained returns and represent a good investment, Black Horse Agencies said. Small private investors, both local and overseas, accounted for one in five of all landlords and were now replacing those who became landlords simply to wait until prices improved. The availability of 'buy- to-let' mortgages is enabling more investors to enter the market with the prospects of good returns.