Sales of luxury homes appear stable but leasing will face pressure because of economic contraction and company cost-cutting, says Hysan Development. The senior general manager of Hysan's property department, Dickie Wong, said the company had received stronger than expected response to the recent sale of its 74-unit residential project at 3 Garden Terrace in Mid-Levels. Only three units were still available and the result showed that luxury flat prices found support from both buyers and investors at reasonable levels. Mr Wong said recent sales at Garden Terrace and all 62 flats at Broadwood Park in Happy Valley had together raised more than $1.7 billion. Buyers and investors had returned to the market because they believed it had reached bottom and further price falls, if any, would be limited. The luxury sales market, especially in prime residential areas on Hong Kong Island, would find strong support, he said. Hysan has no plan to sell other investment properties after Broadwood Park and 3 Garden Terrace. The group is marketing the lease of vacant flats in another investment property, Bamboo Grove in Kennedy Road, Wan Chai. Mr Wong said 30 flats in the six-block, 340-unit development had been put on offer at competitive rents with flexible terms to attract tenants. Hysan had appointed Vigers Hong Kong as leasing agents in a joint marketing drive to promote the lease in the face of keen competition from other landlords. Mr Wong said tenants were more cost-conscious, looking for value for money in rental accommodation because of the poor economic conditions. Given an economic contraction following the financial crisis, local and multinational companies were trying to increase efficiency and make better use of resources, and a rationalisation of housing budgets was a key component of the process, he said. Companies had been adopting reforms in allocating housing rental benefits to staff, notably by cutting budgets or allowances or by giving out cash benefits instead of providing rental accommodation. In some cases, companies had cut the number of expatriate staff. Others chose to recruit young couples or single employees rather than families with children to trim housing costs. Mr Wong said administrators of housing provision in companies faced pressure to weight their options in a bid to get the best deals in the economic environment, which effectively resulted in more bargaining in a competitive market. Although he expressed confidence that the economy would stabilise, he said it remained difficult to predict accurately when the luxury leasing market would pick up. According to Mr Wong, average rents for the 30 Bamboo Grove units are between $20 and $30 per square foot per month, exclusive of rates and management fees but inclusive of a car-parking space each. Basic rental ranges from about $25,000 to $64,000 for standard units measuring 986 to 2,600 sq ft. One penthouse unit of 3,282 sq ft is among the units which are on lease. Mr Wong said the offer rents for the 30 units were about 10 per cent down from the peak rates charged last year. He said its adjustment was lower than the market's average rental correction because the rates previously charged by Hysan were at more reasonable levels. This was in line with the company's policy of establishing long-term relationships with clients and not trying to 'squeeze the last dollar from tenants'. Since the marketing was launched two weeks ago, six tenants had committed or were about to commit themselves to the units. Serious negotiations were under way with 20 prospective tenants. Mr Wong said Hysan was offering flexible terms and provision of furnishings at the request of tenants. Premiums would be charged for renovation and furnishings for units. The group had lined up with suppliers to provide furniture if needed. He estimated that tenants would be required to pay a premium of 15 to 20 per cent on basic rents for upgraded units, depending on the quality and the quantity of furnishings and decoration work requested. To suit different tenants' needs, Hysan also offered flexible leasing terms on tenancy period to increase the units' attraction. Usually, the terms were for two years, with a break clause to be exercisable after the first year, Mr Wong said. He said Bamboo Grove, the biggest residential property in the Hysan portfolio, had been sought after by tenants and was a popular residence of many consuls-general of various countries in Hong Kong. Despite the slowed market, Hysan's rental residential portfolio still achieved an occupancy of about 95 per cent, he said.