THE Hong Kong-based Cluttons London Residential Agency claims about 75 per cent of its buyers are from the Far East. They may not all be Hong Kong buyers, but William Green, manager of the agency, said local Chinese investors were active. ''Property is cheap at present, the exchange rate is favourable and borrowing costs are low,'' he said. ''Almost all local Chinese are looking for new buildings with good facilities.'' The problem at present is a shortage of such property. Increased interest from November last year, when Britain left the Exchange Rate Mechanism, has taken up the slack over the past eight or nine months, despite price increases of about 1.75 per cent. ''There was a crisis in mid-summer, when new property was very short, but the builders are back on site and property is coming on stream again,'' said Mr Green. Cluttons is now marketing an off-plan development in St Johns Wood and a completed phase of a Docklands' residential project. The improvement in the British property market is forcing changes in the attitude of Hong Kong buyers. More than 75 per cent of Montpelier's clients are Hong Kong-Chinese, and half of them are buying for their own use. London was the main choice in the past, but one definite change was towards cheaper locations, said Anna Miller, Montpelier. ''They all want to buy new houses, but it is impossible to find this type of property for GBP100,000 (about HK$1.18 million) in central London. ''[Therefore] a lot of people are buying outside of London in places such as Peterborough and Northampton, where houses are on the market at between GBP50,000 and GBP100,000. ''It is a cheaper location, the net rental return is between seven per cent and 10 per cent, and it is not too difficult to find tenants. ''Because of increasing demand, homes are moving more quickly now in the UK, and properties are being put on the market again. ''Properties are holding their prices but, despite this, anything that is any good is going quickly.'' As a result, the discounts which have been readily available in previous years are now hard to come by. ''Reductions in and around London are not forthcoming any more and, although prices are open to negotiation elsewhere, owners are not prepared to knock 25 per cent off the top,'' said Ms Miller. Properties within close commuting distance of London are, in many cases, replacing the better known districts. The Black Horse Agency was promoting three estates within the M25 motorway ring road last weekend, and, in early October, Montpelier will exhibit homes near Bracknell, in Berkshire, about 40 kilometres from central London. Despite this trend the demand still exists for central London property. First Pacific associate director Frank Marriott said that both Hong Kong-Chinese and expatriates were looking for investment property, predominantly in London in the GBP200,000 to GBP300,000 bracket. Larger investors, prepared to spend between GBP1 million and GBP3 million, are going for anything from a good house to a small block of five to 10 apartments in central London.