IT'S an Asian gold rush. Expatriates are flooding into Hong Kong looking for riches and a luxury lifestyle as Western firms hustle for a share of China's economic 'miracle'. But it's business at any price and the fall-out is inflated salaries, sky-high rents and havoc in the housing market.

The downside for people already in Hong Kong are rent increases of up to 50 per cent, forcing families out of their homes and sometimes out of the territory. For every person who can't afford the new rent, there are two companies willing to foot the bill for their expatriate staff, say estate agents. Rents went up by about 30 per cent last year (about 10 per cent in the last quarter) and this trend is expected to continue. Estate agents predict another 30 per cent increase before the end of this year.

Luxury apartments are fetching exorbitant prices and are in short supply. People trapped in the middle are feeling the domino effect because landlords - all too aware of the escalating prices and the shortage of apartments - are milking the market for all it's worth.

Two professional couples were forced to leave Hong Kong last month when their rentals jumped an unaffordable 50 per cent from $18,000 (Mid-Levels) and $22,000 (Happy Valley). They were faced with a tough decision: move downmarket or move out altogether.

A couple who live in a Pokfulam high-rise this week found out that their rent had gone from $28,000 to $40,000. They have registered a complaint with the rent tribunal and will have to look for cheaper accommodation or leave Hong Kong. Apartments at another complex in Pokfulam which were renting for approximately $39,000 late last year are now going for no less than $52,000.

An agent who called a landlord two days after her company advertised his Happy Valley property was told that it had gone up by $10,000 since the advertisement was placed.

None of this, not the greedy landlord nor the staggering rent increases, is surprising, say estate agents who admit even they are amazed at the speed at which rentals are rising.

A top rental used to be $50 per square foot, but agents say this is becoming a standard price for apartments in sought-after areas like The Peak and the south side of the island. 'The property market has gone completely over the top,' says Elaine Young, manager of Associated Surveyors. 'Nothing would surprise me anymore. A Repulse Bay apartment in a block built in 1964 is on the market for $125,000. I rented one in this block for $60,000 last year. This is a wildly inflated price for an apartment in an old block with a swimming pool - that's nothing special - and which has obstructed views and no other facilities.' According to Frank Marriott, associate director of leasing at First Pacific Davies, Hong Kong has the second highest residential rents in the world after Tokyo. This trend is here to stay as long as business in China beckons and financial institutions continue to woo expatriate staff.

Associated Surveyors recently rented an apartment for a major European bank for $120,000 and an $85,000 flat for an American securities firm. 'The big packages are nearly always for bankers or stockbrokers - people in various financial institutions. There are plenty of big deals like these but we also have on our books many people who are battling to find something in the $40,000 range. People in this range either pay their own rent, are subsidised by their companies or were on expatriate deals which have been cut back.' An estate agent from Virgin Properties summed it up: 'It's impossible to even keep up these days. You phone to see if a property is still available and the landlord says 'yes, but it went up $10,000 since yesterday'. There was a time when properties were negotiable but you can forget it these days. Landlords don't even come down $1,000 and they demand all sorts of things like non-refundable deposits. It used to be enticing to offer a landlord a lease signed by a company but nowadays they're not interested in you if it's not a company lease.' In a city with six million Chinese and less than a million expatriates this shouldn't be a white story but to some extent it is.

Mr Marriott said: 'Tighter curbs on mortgage financing (now only 60 per cent) have deterred many a would-be home buyer who has no choice but to now turn to rented accommodation. This slowing in home sales is putting increasing pressure on an already frenetic leasing market.

'Demand for luxury flats and houses for rent is now far outstripping new supply and landlords have been quick to react by shoving up prices. Investors and developers who would normally want to sell their units are now putting them up for rent to make a quick buck. Also, most of the new major developments are small, thus increasing the demand for the larger, older apartments.

'Rather than baulking at the steep increases, more companies are moving into Hong Kong. Although rentals are pushing $50 a square foot, local and international companies are fighting for space in a limited market.' Agents claim that tenants who signed leases in 1990/91 can expect massive rental increases of up to 60 per cent. In 1990, tenants could lease space on the south side for between $14 and $16 a square foot and enjoy a rent-free period and other incentives from the landlord. Towards the end of last year, the same space was fetching $25 to $28 a square foot with no frills and added demands such as non-refundable deposits. Anything up to $50 a square foot now goes. In Mid-Levels, typical rentals have risen from $18 to $20 a square foot in 1990 to more than $28.

'Massive take-up of executive level property has narrowed the choice of reasonably priced housing,' said Elaine Smith. 'And it is not unusual for firms to have to spend in excess of $100,000 to entice high-level recruits. Just look at the newspaper property section and see how many places go for more than $100,000 these days. It's nothing special to see apartments renting for prices upwards of $150,000.' Mr Marriott thinks people who are determined to stay in Hong Kong will have to start moving downmarket. 'We are going to see people who were accustomed to bigger apartments settling for less than 1,000 square feet or they will have to take older, unrenovated apartments - and even those are sought-after and in short supply.

'We will also see decentralisation; more and more families moving out to the New Territories and less convenient areas like Lamma and Lantau. Discovery Bay is already becoming more expensive for this very reason. In time, affordable areas like North Point and Quarry Bay may even become fashionable - the Mid-Levels of the late 1990s.' The other option is to take your gripes to the Land Tribunal. 'It is very effective in determining what the correct market value of the property should be,' said valuation consultancy director at First Pacific Davies, Julie Baldwin. 'The landlord and tenant both gather evidence with the help of chartered surveyors. After a court hearing at which the tribunal hears evidence from both sides, the tribunal decides what a prevailing fair market related rental is. The tribunal may allow the increased rental or set a lower rental.' She said the time to notify the tribunal of intended action was when the landlord issued form CR101 which advises tenants of what their new rent will be (not less than six months before the lease is up). 'This notice should be accompanied by an indication of the intended rent increase. The tenant then replies [CR102] and at this stage would indicate that they are taking the matter to the tribunal. By applying six months in advance to have the case heard, there is a fair chance the tribunal will hear the case at the time the new lease needs to be finalised. However, if the tribunal hears the case later and finds the rent unacceptable, the tenant will be reimbursed from the date the new lease was signed.' A happy ending? 'No, not necessarily. Because the property market is so crazy, it's quite possible the tribunal will find that other properties in the area are also renting for incredibly high prices.' THE PEAK RENTAL: $150,000 to $200,000.

PAID BY: Big financial corporations, usually American.

WHERE: The Peak, Redhill Peninsula, Tai Tam, the south side and increasingly everywhere else.

WHO LIVES THERE: The chairman of some banking/financial institution and the chairwoman/patron of a worthy cause, three children who briefly attend Island School before being sent overseas to study, a constant stream of relatives, two amahs (one to clean, one to cook), a Filipino driver, two Burmese cats, a Pekinese, a poodle and another yappy dog.

WHAT YOU GET FOR THE MONEY: A free-standing house or an apartment of around 3,750 square feet with garage space for three cars. A real garden with trees and birds, an intercom system at the entrance and remote control gates. Inside: four bedrooms, a den, aseparate lounge and dining-room, a kitchen big enough to play soccer in, four bathrooms (two en suite), walk-in wardrobes and servants quarters which sleep three. Facilities include: a jacuzzi, private swimming pool and tennis court (only seen when residents drive past on the way to one of their six clubs), outdoor entertainment area - only used by the kids when they're home on holiday.

WHERE WASHING GETS HUNG: Discreetly, where only the amah can see it. On a private line off the laundry or on the roof.

VIEWS: Unobstructed views of the ocean, the harbour, the garden and the rest of Hong Kong.

DRAWBACKS: On The Peak, leather rots in humid weather, walls crawl with mould, view-obscuring mist for five months of the year. Access road to southside a nightmare during peak hours even if you have a Porsche.

TREATMENT BY AGENT: Fetched from the doorstep of the Mandarin Oriental in a limo. Presented with a dossier of properties, all neatly typed out and introduced. Orientation service thrown in after deal is done.

REPUBLSE BAY RENTAL: $80,000 to $100,000.

PAID BY: Lower profile company usually a financial institution, probably European.

WHERE: South side, second row of houses in Redhill (not quite on the peninsula), Mount Butler, Jardine's Lookout, Shouson Hill.

WHO LIVES THERE: Stockbroker, managing director or vice-chairman and his family. Wife is a secretary of a charity organisation and helps out at the Vietnamese camps and holds babies at Mother's Choice, two children at Island School, one amah, a dog from the RSPCA.

WHAT YOU GET FOR THE MONEY: 2,750-square foot apartment with three bedrooms, three bathrooms (one en-suite), a study, separate dining-room and lounge, kitchen, servants quarters for two, a lock-up garage, built-in cupboards. Outside: small terrace/garden or big balcony. Facilities: private club on the complex with sports facilities and possibly a restaurant. Shuttle bus to Central.

WHERE THE WASHING IS HUNG: On the private roof or smallish garden.

VIEWS: In Redhill, a view of the house that has the sea view. Harbour or ocean views and glimpses of the house/balcony next door. No view except the plush surrounds of the complex.

DRAWBACKS: Have to book the tennis court. May have to share the swimming pool. Garage only takes one car. Only one amah's room.

TREATMENT BY AGENT: Fetched from doorstep in a Lexus. In this bracket the agent starts to say: 'I'll show you something for a little more than your budget because then you get a double garage and the back yard. It's negotiable of course.' No orientation programme thrown in.

TREGUNTER RENTAL: $45,000 to $70,000.

PAID BY: Non-financial company, expatriates on packages.

WHERE: Big complexes like Tregunter and Parkview, the penthouses of less salubrious blocks, large old apartments with 'character' and no facilities, Pokfulam, south side, Garden Road, Happy Valley, Tai Hang Road, Bowen Road, Kennedy Road.

WHO LIVES THERE: Young double-income-no-children couple, middle-managers or engineers with young families, a budgie or cat.

WHAT YOU GET FOR YOUR MONEY: 2,500 square feet in an older apartment with no facilities or a small apartment in a shiny new complex (like Pacific Palisades penthouses). Inside: three bedrooms, combined lounge and dining room, smallish kitchen, two bathrooms (one en-suite) in avocado green or baby pink, not enough cupboards, an amah's room-cum-broom cupboard. Balcony, roof garden or minute garden. Facilities: gym or sauna, tennis or squash court, swimming pool shared with 100 other flats, parking for one caron the fourth basement floor or uncovered parking bay.

VIEWS: Partially obstructed sea views.

WHERE WASHING GETS HUNG: Communal roof, on wires outside the amah's room, or tumble-drier in the summer.

DRAWBACKS: Because you're already putting a few thousand towards the rent (plus rates and management fees), you may have to move if the rental is increased. The amah has to share the guest bathroom.

TREATMENT BY AGENT: 'Oh dear, there's not much in your price range. You do know that this is a very difficult budget - a few thousand more would make all the difference.' Agent arranges to meet at her Central office and makes appointments strictly during her working hours. Shows you things which are out of your budget on the premise that they may be negotiable (actually she's hoping the wife will cry so much that the husband is forced to ask the company for more money).

MID-LEVELS RENTAL: $40,000 or less (including management fees and rates).


WHERE: Discovery Bay, Happy Valley, Mid-Levels, Central (Hollywood Road), close to ferry, bus routes or MTR.

WHO LIVES THERE: A Western family with rental allowance or good salary. Swinging singles who share the rent. A Chinese family waiting for the right time to buy.

WHAT YOU GET FOR YOUR MONEY: About 1,200 square feet or less, two or three small bedrooms, one bathroom, tiny kitchen, smallish lounge-cum-dining-room, broom cupboard-cum-amah's room, small balcony. Outside car park. No facilities.

VIEWS: Mountainside, other buildings, the Happy Valley racecourse.

WHERE WASHING GETS DRIED: In the laundromat, bathroom or balcony.

DRAWBACKS: Flatmate absconds without paying his third of the rent. Probably next to a building site.

TREATMENT BY AGENT: Tells you to meet her at the apartment and shows someone else at the same time, or asks you to collect the key - and return it promptly. The newest agent is sent with you, and doesn't know the way to the flat.

MONGKOK RENTAL: Less than $10,000.

PAID BY: You - or maybe your father.

WHERE: Wan Chai, Lamma, Western, Tsim Sha Tsui, Shek O, Mui Wo.

WHO LIVES THERE: Single white female/male who is never in. Low-income Chinese family.

WHAT YOU GET: About 500 square feet, one or two tiny bedrooms, small living space, cupboard-size kitchen and shower-room.

VIEWS: The wet market, somebody else's living-room, a wall.

WHERE WASHING GETS DRIED: In the laundrette.

DRAWBACKS: Pot plants take up too much space. Can hear mahjong and karaoke through the wall.

TREATMENT BY AGENT: What estate agent?