New supply of residential property in traditional luxury areas this year will be more than double that of last year. However, analysts said capital values in the most prestigious areas would be sustainable. One major source of supply is Wharf's 36 apartments and duplexes at Chelsea Court and Mountain Court, due to be completed in the third quarter. According to a survey by Chesterton Petty, the number of units to be completed on The Peak this year will probably jump to 138 from seven units in 1999. There were fewer than 3,000 units on The Peak at present, analysts said. The survey also showed that units to be completed in four luxury districts this year would reach 1,553, more than double the 1999 figure of 732 units. The districts are The Peak, Island South, Mid-Levels and Happy Valley. Island South supply will increase from seven units to 289 this year. Watson Chan, research director of Chesterton Petty, said while The Peak's projects were largely unsold, some Island South projects were sold last year. It is understood one buyer was the United States investment fund GRA which had acquired several projects from Emperor International Holdings and National Electronics Holdings. However, Wharf's portfolio on The Peak and other developments such as Nan Fung Development's Peak Road project had not been launched yet. This means The Peak may be the focus of the luxury sector this year. Jones Lang LaSalle regional director Joseph Tsang did not think the sharp increase in luxury supply would have much impact. It was normal that the supply figures were volatile, he said. Mr Tsang said supply of 'genuine' luxury properties, which start from 1,700 square feet in size, still remained at low levels this year. Only 300 new units fall in this category this year, according to Jones Lang LaSalle's survey. 'It will not be difficult for the market to absorb several hundred luxury units,' Mr Tsang said. He believed the market would be positive this year as the economy was stabilising. Political strife across the Taiwan Strait should not cloud the market as shown by the stable stock markets following the presidential elections, Mr Tsang said. Cushman & Wakefield director Simon Chow said properties in The Peak and Island South would not be affected by higher supply as they were the targets of international investment funds and enjoyed a premium above luxury properties in other districts. The confidence of landlords in both areas would be boosted and the asking prices could remain high, he said. Although investment funds snapped up many luxury projects last year, Mr Chow believed they would not rush to diversify into the office sector this year. Office investment yields were not attractive enough, he said. Chesterton estimated the number of Mid-Levels units would rise 81 per cent to 909 while Happy Valley would remain at 217 units. Mr Chan said projects in these areas would include single-tower developments which might not be 'luxurious' enough to attract the market. Kennedy Asia managing director Max Chik said transacted prices of luxury properties in Island South and The Peak rose more than 10 per cent last month, indicating strong demand in the sector.