The dramatic appreciation of property prices in the past year has made local assets less attractive, according to property asset management company Pamfleet (HK), one of the most active buyers in the market. Managing director David Holdsworth said Pamfleet focused on acquiring distressed assets, the prices of which had gone up to a level equivalent to good assets. 'Landlords' asking prices are getting aggressive,' he said. However, Mr Holdsworth said Hong Kong remained the company's primary investment destination. Pamfleet preferred Hong Kong to other Asian countries as investors could fetch higher returns in the city under a well-established legal system. 'Legal framework is a determinant factor as to where to put your investment, particularly in properties,' he said. Pamfleet teamed up with Morgan Stanley to acquire Paliburg Plaza and Kowloon City Plaza for $2.03 billion in April, the biggest deal this year. They also acquired Vicwood Plaza in Sheung Wan for $842.8 million in June last year amid the Sars crisis, taking advantage of the low-cost funding environment. Director Andrew Moore said most distressed asset transactions took place last year, when prices dropped to a new low and the economy was hit severely by the Sars outbreak. 'But the investment risk at that time was higher [because of market uncertainties],' he said. Pamfleet is focusing on increasing the investment value of Vicwood Plaza, Kowloon City Plaza and Paliburg Plaza. Mr Moore expected the $40 million renovation of the 38-storey office-commercial building Vicwood Plaza would be completed by October. The firm will soon release 100,000 square feet of the newly renovated office space for lease at a monthly rent of $12.50 to $15 per square foot. The retail space will be leased at a monthly rate of $40 to $90 per square foot. Mr Moore said the retail podium would mostly accommodate restaurants, the main customers being office workers, and that some shops on the ground and first floors had been leased. Mr Holdsworth expected 80 per cent of the retail podium to be occupied by the time the renovation is completed. Talks with potential office tenants are under way. Vicwood Plaza's asking rent is half of Central's $30 to $35 per square foot. Mr Holdsworth refused to give rental income projections, saying about 65 per cent of retail space and 40 per cent of office space at Vicwood Plaza was empty before the consortium bought the building. Pamfleet will also carry out a major refurbishment to transform underperforming Kowloon City Plaza into a retail, food and beverage, and entertainment destination. Mr Holdsworth said the commercial property had been badly managed for a long time as a result of financial trouble that had haunted the original owner, Paliburg Holdings. 'We think we should be able to double the existing rental income after the renovation,' he said.