The spiralling prices of retail shops in Hong Kong have driven investment yields in the sector to unreasonably low levels, according to a veteran retail property investor who has quit the market which he says has become overvalued. 'Retail property is no longer a viable investment vehicle,' said Edwin Leong Siu-hung, the chairman and founder of Tai Hung Fai Enterprise. Leong made his first street shop investment 11 years ago and until prices outstripped what he believed was a reasonable level, he was an active buyer of retail shops. However, for the past three years he has not added to his portfolio. A recent asking price of a shop, he said, illustrated his concerns. The asking price of the shop in Kai Chiu Road in Causeway Bay is about HK$250 million, resulting in an investment yield that Leong calculated would have been just 2 per cent or so, against recent historical yields in the sector of about 5 per cent. 'Street shops have become a collector's item. They are no longer being bought for their investment value,' Leong said. Tai Hung Fai owns about 100 shops, according to Leong. And although he has cashed out of some investments in recent years to take a profit on rising valuations he has not bought since 2007. Instead, Leong is turning his attention to the development of hotels, residential and commercial properties in the city by assembling small properties and packaging them into a site that would be suitable for redevelopment. He said the change in strategy had also been prompted by the low interest rate environment that enhanced a developer's holding power. Tai Hung Fai now plans to build a 30-storey high-end luxury residential building in Argyle Street in Mong Kok. It is also in talks to buy two sites of 10,000 square feet each on Hong Kong Island and recently appointed four-star hotel chain Indigo - part of the InterContinental Hotels Group - to run its 150-room hotel in Wan Chai, which will be completed in 2012. The company is also in talks with InterContinental's three-star hotel chain, Holiday Inn Express, to run its proposed 300-room hotel in Mong Kok. 'Hotel development is good for maintaining the value of the land site because it generates recurrent income. If property prices boom in the next three to four years, we can tear it down and redevelop it for more valuable properties like residential or commercial for sale,' Leong said. The company's total assets were estimated at HK$15 billion, said Leong, who calls his firm a medium-sized developer. Asked if the company would go for a Hong Kong listing, Leong said this would happen within the next 10 years during which he plans to put the firm in good shape and then pass it to professionals to run when he retires.