The chief executive officer of Professional Property Services is optimistic about the Hong Kong luxury property market this year.

Margaret Brooke told reporters at a Hong Kong General Chamber of Commerce luncheon yesterday that the market will be rich with an inflow of overseas capital.

In addition, she dismissed worries that the upcoming mortgage rate reversal will undermine homebuyers' confidence in the mass-residential market.

Hong Kong lenders appear to be on the verge of raising their mortgage rates in the face of the climbing inflation and the rise of the Hong Kong interbank offered rate (HIBOR).

Hang Seng Bank Vice Chairman and Chief Executive Raymond Or recently said that Hong Kong lenders will raise their mortgage rates if the HIBOR continues to go up.

Financial institutions Citigroup and Credit Suisse First Boston believe the upside adjustment of the mortgage rate will be about 25 basis point.

Brooke, however, expects the impact of the rate rise to be very little, saying: "The current mortgage rate still stands at a very low level, and it has little room to grow".

She said the luxury property market success this year is in part due to investors from the mainland and Middle East enthusiastically putting their money into such properties.

A recent Vigers report predicted that the pace of primary market sales has picked up this month, thanks to a number of new developments, including the Palazzo and Celestial Heights.

Regarding the mainland market, Brooke said the property sector looks to remain unsettled over the next 12 to 18 months.

In light of the tightening measures by the central government, she believes the property prices in large cities such as Beijing and Shanghai are unlikely to pick up this year.

But she said that property prices in second-tier cities, such as Chongqing and Hangzhou, might see a higher growth, as more developers look to increase their presence in such markets.

Separately, although Vietnam's property prices plunged by 20 to 50 percent with the country's ailing economy, Thierry Gougy, partner of the DFDL Mekong Legal & Tax Advisers, believes the market may bottom out in the short run.

"Foreign investors remain positive, given that all of our foreign clients have no intention to withdraw," Gougy said.

Brooke echoed his view, saying that it is a good time to invest in Vietnam properties, as the luxury and office properties there have dropped to reasonable levels.

(HK Edition 06/14/2008 page2)