Merrill Lynch, the United States investment bank controversially acquired in January by Bank of America Corp, is planning to quit its investment in three Hong Kong properties. The Merrill Lynch property investment unit had appointed the Asia Capital Markets department at property consultancy Jones Lang LaSalle to handle the sales, market sources said. Merrill Lynch declined to comment. The three properties are Silver Fortune Plaza in Central and Golden Plaza and Pakpolee Commercial Centre in Mong Kok, bought in 2007 for a total of about HK$1.368 billion. Sources said Merrill now hoped to sell them for about HK$1.6 billion, generating a profit of about HK$232 million without taking into account the rental income generated by the properties in the last few years. Merrill Lynch took its first step into Hong Kong's investment property market in March 2007, when it acquired majority ownership of Golden Plaza for HK$530 million. The property offers the biggest wedding shopping centre in Hong Kong, with a total gross floor area of 45,800 square feet, and most of the retail shops are currently leased. In the same year, it bought the retail portion of Silver Fortune Plaza and Pakpolee Commercial Centre for HK$838 million. Silver Fortune Plaza has a retail space of 31,840 sq ft, leased to a fitness centre for about HK$2.4 million a month, while Pakpolee Commercial Centre has more than 40,000 sq ft. A property agent said the three properties offer rental yields of more than 5 per cent, which seems attractive to investors. However, he warned that since some of the leases were due to expire this year, rental incomes and yields would fall. For example, the lease for the fitness centre at Silver Fortune Plaza is at a monthly rent of HK$2.4 million. But the lease will expire in the middle of the year, and agents say rent collection may fall to about HK$1.7 million. Kent Fong Chi-kit, co-head of the investment department at Cushman & Wakefield, said the property investment market turned active this month. In the first quarter of the year, most buyers were end-users, he said. However, investors looking for stable rental incomes had returned to the market in the second quarter. 'The market recorded more transactions this month compared with a month ago,' he said. But since economic conditions remained weak, he expected little increase in deal making in the second half of the year. Antonio Wu, an executive director of the Hong Kong investment department at Colliers International, said most investment funds were now focusing on asset management to improve the leasing performance of the properties. 'Funds are hesitating to enter the property market, as sentiment is not encouraging,' he said. 'They won't acquire property unless the market stabilises or it is a distressed property in a prime location.' Private equity funds, on the other hand, were more active in looking for investment opportunities with higher rental yield. 'The lending cost of buying investment property is higher than before, and the market outlook remains uncertain,' Mr Wu said. 'Investors are now only interested in properties that offer rental yields of 6 to 7 per cent or above.'