Three new projects on The Peak and in Chung Hom Kok are set to make an appearance at the market's high end Optimistic developers, sensing that luxury rents will continue to surge this year, are preparing to launch three luxury projects in the coming months, following a relatively quiet summer for the sector. One of the developments is Severn 8, a 22-house project on The Peak. Its construction work has been completed and Severn 8 will be launched next month. The other two projects are in Island South. They are Island Grove, a five-house development at 40 Island Road, and a new 14-house project at 33 Cape Road, Chung Hom Kok. Severn 8 developer Sun Hung Kai Properties said it would be selling only about seven or eight of the houses at about $30,000 per sqft. The remaining houses would be leased out at $80 per sqft. Houses at Severn 8 range from 3,300 sqft and 4,300 sqft to 5,100 sqft. Victor Lui Ting, executive director of SHKP's sales and marketing arm Sun Hun Kai Real Estate Agency, said the developer had raised its rents for luxury properties by more than 20 per cent this year. Units fetch more than $50,000 a month. 'And I expect the rent to go up another 10 per cent by the end of the year,' said Mr Lui, adding that the rent increases would boost investor confidence in buying units in the project. However, one real estate agent believed the target rents were pitched rather high. He said only a few new houses on The Peak were able to fetch rents of as much as $60 per sq ft recently. For example, a 4,407 sqft house at 2 Barker Road, developed by China Resources (Holdings) was recently leased out at $260,000 a month. In Island South, Island Grove, a development of five houses at 40 Island Road, jointly developed by a private developer and investment firm Carlington Holdings, is to be put up for sale soon. Carlington Holdings managing director Albert Poon Shun-kwok said three of the houses, ranging from 5,080 to 5,300 sqft, will be put on the market for sale as early as next week. The asking price is $30,000 per sqft. The most expensive price on Island Road so far is for 33 Island Road, at $25,000 per sqft by New World Development. 'We have an unobstructed sea view, so we are selling at a premium price compared to other projects on the Island Road,' Mr Poon said. Small developer Tai Cheung (Holding) is selling 14 new houses at 33Cape Road, Chung Hom Kok. The houses, each of at least 3,000 sqft, are being sold for about $40 million per unit, or $17,000 per sqft. Meanwhile, Macquarie Global Property Advisor recently relaunched its refurbished low-rise apartment project, 56Repulse Bay Road, formerly known as Royal Cliff. Investment bank Merrill Lynch has a 30 per cent stake in the project, while Macquarie Global Property Advisor holds the remaining 70 per cent. According to Macquarie Global Property Advisor managing director Michael Wilkinson, 20 of the 53 apartments, ranging from 2,700 sqft to 4, 400 sqft, have been sold since September last year. Prices ranged from $18,000 to $23,000 per sqft. The second phase of the project, which will have its own public garden space, will be offered at $17,000 to $25,000 per sqft Mr Wilkinson predicted that luxury rents would rise at a much faster rate than capital appreciation in the next 12 months. The most recent luxury rent transaction was at $61 per sqft per month, at 56 Repulse Bay Road. This translated into 3.7 per cent in rental yield, Mr Wilkinson said. 'Over the next 12 months, I expect residential rents to increase 20 per cent and capital value to increase 10 per cent,' he said, adding that the rental yield would increase to 4 per cent. Mr Wilkinson expected that the introduction of real estate investment trusts (reits) in Hong Kong would raise the demand for luxury properties and result in stable returns, as had been the case in Tokyo, Japan. Property consultants said that speculators were not confident about making fast money with the market in its current state, and that developers were therefore putting a greater emphasis on rental returns. A residential property director with an international property consultant said the number of luxury property transactions had shrunk by more than 30 per cent in the past three months. No significant new low-density luxury projects have been launched since June, when Wharf's 48-unit development, No1 Plantation Road, came on stream. Meanwhile, on The Peak, a detached house built in 1948 is being tendered for sale. The 20 Peak Road property, on a 25,764 sqft site, had strong redevelopment potential, a real estate agent said. Tenders are due to close on October 6.