Driven by strong demand from mainland buyers who have targeted the area, prices of luxury flats in West Kowloon have recovered to within a whisker of the levels they reached at the halfway mark last year before the onset of the global financial crisis, latest research from CB Richard Ellis shows. According to the CBRE report, prices of luxury units in the area rose 13 per cent quarter on quarter at the end of the third quarter to an average of HK$13,239 per square foot. That put them just 1 per cent below the price measured by CBRE at the end of the second quarter last year. By comparison, despite a 19 per cent quarter on quarter rise in luxury flat prices on The Peak, prices in the most expensive housing district in the city (average price of HK$23,354 per square foot) remain 22 per cent below their levels reached at the halfway mark last year. Island South prices still lag last year's pre-crisis levels by 16 per cent, Mid-Levels prices remain 8 per cent lower, and prices at Jardine's Lookout are just 2 per cent down on their halfway levels last year. Units at Kowloon Station were popular among mainland buyers because they enjoyed high liquidity, said Shih Wing-ching, chairman of Centaline Property Agency. 'It was easy for flat owners to sell their luxury apartments in the market and prices in the area had upside potential. But now there is a question of whether prices will continue to increase as sharply,' he said. However, Benedict Ma, associate director of the research department at the firm, remained optimistic on the market outlook for West Kowloon which he said had gained importance and emerged as a new luxury residential district in recent years due to massive infrastructure changes to the area. The major infrastructure includes Kowloon Station, the recently completed Kowloon Southern Link and the newly approved Guangzhou-Shenzhen-Hong Kong Express Rail Link. Kowloon Southern Link connects the MTR's West and East Rail Lines at Austin Station. The Express Rail Link will connect Hong Kong to Guangzhou through a high speed rail with a travel time of only 48 minutes when completed in 2015. It will help Hong Kong further integrate with the Pearl River Delta, as well as act as an artery to connect Hong Kong to the Greater China national rail network. Ma expects the planned West Kowloon Cultural District will also help to enhance the area's attractiveness as a place to live and play. Shih said properties in the area with new infrastructures or developments would have a higher upside potential. He was optimistic about the outlook for property in Sai Wan and Hung Hom, which he said would benefit from the construction of new railway lines. The MTR West Island Line, which will connect Sheung Wan and Kennedy Town, is under construction and will have intermediate stations at Sai Ying Pun and the University of Hong Kong. The project is scheduled for completion in 2014. The government also plans to build a Kwun Tong Line Extension to connect Yau Ma Tei to Whampoa in Hung Hom. 'Property prices in these areas are cheaper than the areas accessible by rail. This situation is going to change after the railway is developed,' Shih said.