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Asia Property Report

Daily, Bangkok
Up-to-date news and coverage of industry trends and innovations from Asia with an in-depth special focus on real estate hot spots, as well as key interviews with important industry figures.

Southeast Asia's high end property market: a mixture of results

May 16, 2012
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In the first quarter of 2012 Southeast Asia's luxury property market have proved a mixed-bag

The first quarter of 2012 has seen an average growth of one per cent in high end residential prices in eight of the key markets in Asia.

Bangkok, Hong Kong, Kuala Lumpur and Jakarta’s market rose in the consecutive quarter of 2011-12, according to Jones Lang LaSalle’s recent Residential Index.

The strongest monitored property value, up 4.3 per cent in the first quarter of this year was Jakarta. They had a growth of around 16 per cent.

Capital values in Kuala Lumpur’s top end market were up by 6.9 per cent largely due to stock additions.

The first quarter increase is a continuation of a trend present in the Indonesian market over the last 18-24months, according to Todd Lauchlan, Country Head of Jones Lang LaSalle, Indonesia.

Of that market, he said: “prices have been consistently pushed through by developers on the strength of robust demand levels. Demand is being driven by significantly increased affordability, and with record low interest rates, high consumer confidence levels and strong income growth, we expect to continue to witness the rise of the Indonesian middle class.”

In Hong Kong, there were signs of stabilisation – after declining markets over the past six months; luxury residential prices were up 1.4 per cent, quarter on quarter. This growth is a result of low interest rates and more active mortgage lending by banks.

Growth in emerging Southeast Asian markets aided to offset depreciating value in Singapore and China.

Beijing, Shanghai, and Singapore presented declines in average high end residential prices in the first quarter of 2012, whilst Mumbai was stable.

After remaining in a stable position for six consecutive quarters Singapore’s prime market capital value declined by 2 per cent.

Beijing’s high end residential market fell by 2.3 per cent as gripping policies remains fixed. Shanghai’s market dropped by 1.2 per cent.

Offering future insight into the market, Dr Jane Murray, Head of Research, Asia Pacific, Jones Lang LaSalle said: “Prices in China are expected to decline further over the next 12months, as policy restrictions are likely to remain in place and developers are likely to introduce more price discounts.

“Prices in Hong Kong and Singapore are also expected to decline over 2012, as a result of projected rental correction, generally weaker investor sentiment as well as policy risks.

“The extent of price correction in Hong Kong will likely to be limited by the tight supply situation.

“Among the emerging Southeast Asian markets, the Jakarta sales market should see the strongest price growth on the back of a strong economy.”

Dr Murray concluded that prices in Bangkok and Kuala Lumpur are expected to remain stable.