LUXURY rents in Hong Kong are soaring to new highs, with monthly payments hitting as much as HK$500,000 (S$97,000), as demand from financial services professionals shows no sign of abating.

Prime residential sites on the Peak and the south side of the island are being leased for up to HK$500,000 a month, with the luxury sector already up around 10 per cent in the first six months of the year.

According to property experts, there is still more room for growth this year as supply remains tight and professionals in the financial services industry with very large budgets continue to flood into the city.

As Ricky Poon, a director at Colliers International, explains, it used to be that the top-priced properties were standalone houses on individual plots.

However, today, houses that are part of a larger complex of properties are able to hit the HK$500,000 range. 'It's lack of supply,' Mr Poon says. 'If you want something very grand and super luxurious - and a house - there's no supply at all.'

Developers have been fast to buy up land on the Peak over the years and they place up to five or six individual houses on the plot, rather than just one mega structure. 'They can call this a single number plot, but it still has five houses on the lot ... but these are still very expensive houses,' adds Mr Poon.

The property firm is forecasting a rise in rents of 10 to 15 per cent this year as a whole. There's also a lot of expatriates coming to Hong Kong, 'so we are seeing a lot more demand', he stresses.

Summer is traditionally the busiest time for luxury leasing in Hong Kong as families move to the city in time for the new school year starting in September.

The issue of school places, however, still remains a thorny one for policy-makers, as international supply is tight and families are forced to put their children on waiting lists.

There have also been reports of million-dollar dividends being paid to secure a place as Hong Kong struggles with its supply of international school places. The options for families are either to enrol their child in a private school, or secure a place at the English Schools Foundation, which is subsidised by the government.

In the past year in particular, as more expatriates come to the city, places have become scant.

Office rents in the city are likewise still on a roll: the iconic International Finance Centre 2, which started leasing at the height of Sars in 2003 at just HK$25-35 per square foot, is now fetching rents of more than HK$100 per square foot.

Luxury sales are still rising, with properties in the HK$50 million to HK$100 million range particularly popular at the moment. 'We're still seeing a lot of buyers out there who like a good location and get these properties for their own use,' Mr Poon explains.

In terms of the mass residential sector, the market is slowly improving but still remains up to 30 per cent off the prices in 1997, when the property sector as a whole last saw its major high.

According to the Land Registry of Hong Kong, property transactions in July were valued at a total of HK$38 billion, up 118.8 per cent from a year earlier but still down 3.4 per cent from June.

The number of transactions was up 67 per cent from a year earlier at 11,121, but down 7.2 per cent on June's figure. Of the 11,121 sale and purchase agreements in July, 9,188 were for residential units - a drop of 4.8 per cent compared with June, but a rise of 70.2 per cent over the past 12 months.