Luxury residential rents in Island South will face a new challenge when Sun Hung Kai Properties (SHKP) offers its upmarket project at Repulse Bay early next year, agents say. The new development would draw tenants from existing buildings even though asking rents for the older blocks were relatively lower, they said. Centaline Property Agency sales director Louis Chan Wing-kit said rents for SHKP's project at 127 Repulse Bay Road were expected to be about $50 per square foot - the highest in the area. This compared with the current average price of $40 per sq ft in the area. Mr Chan said the project, which was almost completed, was expected to be offered for lease in the new year. A spokesman for SHKP said the building was scheduled for release early next year, though the company had not made a final decision on whether to offer the project for lease or sale. Jeffrey Ng Chong-yip of Midland Realty said the building would target the top-end sector, such as senior executives of multinational companies. The project comprises 48 standard units of 2,700 sq ft and two duplex units of 5,400 sq ft. Based on the $50 per sq ft forecast, monthly rents for units would be between $135,000 and $270,000, agents said. Mr Ng said he expected that SHKP would use its other luxury development, at 3 Repulse Bay Road, as a reference when setting asking rentals for 127 Repulse Bay Road. Gary Ng Nan-ching, manager of Centaline Property at Repulse Bay, said the building had a prestigious location and full sea views and would be sought after by tenants. He said he expected the developer would provide sweeteners such as rent-free periods or free car parking to drum up interest. Mr Ng said the economic downturn would not affect the leasing of this kind of super-deluxe apartment. For instance, Kerry Properties' Aigburth in Mid-Levels also had generated good response when it was offered for lease, he said. Agents said landlords in the area generally were firmer in asking rents and terms, given a lack of new supply. The rental market remained active in Island South, with most people preferring to lease flats instead of buying homes amid the market uncertainties. People also were taking advantage of the soft rental market to upgrade their living environments. Rents in Island South are estimated to have fallen up to 40 per cent from their peak in 1997. Most tenants were looking for units at between $40,000 and $80,000 per month in Island South, agents said.