Centaline, meanwhile, which brokers a major share of sales in the mass housing market and is one of the leading property agents in the city, is now planning to expand its business by introducing overseas properties to Hong Kong and mainland buyers.

Midland Realty is also strengthening its diversified portfolio such as its finance, mortgage and overseas property divisions.

The changes come against a background of tumbling sales and commission income in the wake of the government's latest anti-speculation measures, which have triggered a sharp fall in transactions in both the residential and commercial property sectors. Sales of second-hand homes have plunged by 70 per cent since the measures became effective on February 22, according to agents.

Under the measures, the stamp duty payable by buyers of residential and non-residential properties valued at HK$2 million or above was doubled. The changes came four months after the introduction of a new 15 per cent tax, known as the buyer's stamp duty, on non-local and corporate property buyers.

In response to the falling transaction volumes, Savills Associates has been formed in Hong Kong.

The unit will focus on sales in the mass housing market. Lee said Savills Associates was already established in Singapore and Taiwan where it had achieved good results. Savills Associates in Singapore has more 1,000 associates.

"We do not pay flat fees to the brokers, but pay a higher percentage commission on each transaction compared with the commissions offered by local major agents," said Lee. "Anyone who is a licensed salesperson can be an associate."

Savills' Hong Kong office now has nearly 60 associates, who may be lawyers or housewives working from home. It aims to have 1,000 consultants by the end of the year.

Savills provides all-round support to the associates as well as training programmes.

"Since mainlanders have become reluctant to buy in Hong Kong after the heavy taxes were introduced, we will also introduce them to overseas properties, " said Lee.

Richard Kirke, managing director of Colliers International Hong Kong, said his company had no plan to follow the move by Savills into the local mass housing market.

Though sales in the local residential market had been falling, the company's international business had picked up since Hong Kong investors had been shifting their capital out of the city, he added.

Centaline Property managing director Louis Chan Wing-kit said demand for Hong Kong properties had plunged after the introduction of the doubling of stamp duty. "But we will find more quality overseas properties to introduce to Hong Kong investors, who are still keen to buy hard assets amid the strong liquidity," he said.

Centaline had started introducing Hong Kong investors to properties in Australia, Thailand, Taiwan, and on the mainland. It has also begun representing London properties to local investors for the first time.

Angela Wong, deputy chairman of Midland Holdings, said the company was well prepared for the market changes. It had established an overseas property division and Midland Finance to provide options for investors.

Vincent Chan Kwan-hing, chief executive of Midland's residential properties, said contributions from the firm's international business division were insignificant and its major source of income remained the Hong Kong housing market.

"What we can do is wait for the return of buying desire. Sales in the secondhand market are painfully slow. But if flat owners were to cut prices by five to 10 per cent, I believe sales would pick up," he said.