Strong investment interest is expected for retail properties in urban areas but shops in the northern New Territories will suffer this year, according to Midland Realty. Senior district manager Tony Lo said retail properties associated with major developments would dominate the market this year. Mr Lo said Great Eagle Holdings' large commercial-hotel development in Mongkok would become the focus of attention and lift investment interest in shops in the area. 'Local investors and investment funds have shown interest in shops in the area in the past two years. The Great Eagle project will stimulate sales activity and fuel prices,' he said. Spanning a 130,000-square- foot site near the intersection of Nathan Road and Argyle Street, the project will provide a 586,000 sq ft shopping/entertainment centre, a grade-A office tower of 709,000 sq ft and a five-star hotel of 465,000 sq ft comprising about 758 rooms. Mr Lo said the increased interest could see prices of shops in the project's neighbourhood rise by 40 or 50 per cent. He also said the proposed redevelopment of North Point Estate had attracted investors looking for bargains among the retail premises along Java Road in North Point. There were 94 transactions of shops in the area last year, compared with 70 the previous year, he said. The sales commanded an average yield of more than 7 per cent per year. Mr Lo said more investors would buy in the district when the North Point Estate redevelopment began. 'Prices of shops in the district will be able to grow by 20 to 30 per cent,' he said. In Tsim Sha Tsui, the East Rail's extension works had affected the market and pushed down shop values substantially. But Mr Lo said some investors might capitalise on this downtrend to secure good quality retail premises. He said shop prices in the area could rebound by 30 to 40 per cent after the railway works were completed in early 2005. Midland Realty assistant sales director Pierre Wong said the round-the-clock border crossing would deal a further blow to the weakened retail market in the northern New Territories. He expected rents of retail properties in northeastern New Territories would fall 15 per cent this year. 'With the 24-hour opening in Lok Ma Chau border, the trend of Hong Kong people going north for shopping and entertainment will intensify,' Mr Wong said. He said sales of retail properties in Sheung Shui and Fanling had decreased by 72 per cent and 25 per cent respectively last year, and he expected to see further declines in sales this year. According to Midland Realty, there were 1,980 major retail property transactions involving a total consideration of HK$11.28 billion last year. This compared with 1,945 transactions worth HK$11 billion in 2001. Mr Wong said sales of retail shops had been boosted by low mortgage rates and a relatively high investment yield.