Property consultancy firm Insignia Brooke predicts residential prices in the New Territories will fall 15 per cent this year, the gloomiest forecast in the industry. Average forecasts put the overall decline at 5 to 10 per cent, but Insignia Brooke predicted the New Territories would be hardest-hit amid substantial supply. Director David Faulkner said new towns such as Tseung Kwan O, Ma On Shan and Tung Chung would see abundant new supply coming on stream and become the most competitive areas. The consultancy said that last year, residential values fell for the fifth consecutive year, with small units suffering the worst drop at 12 per cent, compared with 11 per cent for medium-sized units and 8 per cent for large units. Residential rents fell an average 12 per cent and rental yield slipped about 4 per cent. Consultant Nicholas Brooke said the 24-hour border crossing with Shenzhen would further depress prices in northern New Territories. He said the government's proposed investment immigration policy aimed at attracting overseas investors would have limited impact because the residential market had not been dependent on overseas buyers. New flats in Hong Kong would reach 29,000 this year, compared with 22,000 last year. Mr Brooke said continued market weakness would force smaller players into mergers in order to survive. He said half a dozen small to medium-sized developers, mostly unlisted firms engaged in residential and office developments, could be merged or taken over this year. Grade-A office rentals in Central could fall 15 to 20 per cent to below HK$20 per square foot due to oversupply. Rentals in secondary locations could see sharper falls. Net effective grade-A office rentals in Central could plunge to HK$15 to HK$20 per square foot while those in Quarry Bay could fall to HK$10 per square foot and Pokfulam HK$8 per square foot. The decline in office rentals would increase Hong Kong's overall competitiveness in the region. 'By the end of the year, office rents in Hong Kong may be lower than those in Singapore and Beijing but 15 to 20 per cent above Shanghai's,' he said.