NEW World Development chairman Cheng Yu-tung expects luxury homes to continue to dominate growth in the residential market next year. Speaking after the group's annual general meeting yesterday, Mr Cheng said the residential market would move up steadily, rather than have a drastic rise. ''The increase will probably be about 10 per cent next year, in line with the inflation rate,'' he said. The luxury residential sector, which saw 30 to 40 per cent rises in prices this year, would remain the star performer, he said. ''The growth of luxury home prices will be higher than those of ordinary flats, but it should not be as drastic as the rate this year,'' he said. Mr Cheng said prospects for the property market remained firm due to the territory's limited land supply and underlying demand for flats. ''There are no limits on the price of flats, which will be subject to demand and supply,'' he said. Mr Cheng said New World would maintain its property portfolio, two-thirds of which was property developed for sale and the rest for investment purposes. For the year ended June 30, New World's gross rental income amounted to $1.28 billion, which is $84 million lower than last year's, a result of the sale of 35,300 square metres of floor area in Convention Plaza Apartments and the Convention Plaza Office Tower. The group is building the Salisbury Garden underground development in Tsim Sha Tsui, which will add 13,140 sq m of commercial space when completed in 1995. The fourth and fifth phases of the Container Freight Station at Kwai Chung Berth 3 will provide 286,660 sq m of commercial space. In the past financial year, New World bought 100,000 sq m of farmland in Yuen Long and 60,000 sq m in Sai Kung. The group now has a total reserve of 1.44 million sq m of farmland in the New Territories. It has submitted applications to the Government to modify the land use to permit commercial and residential developments.