Jul 27, 2012
Bangkok lead the way with a growth of 29 percent
Knight Frank’s Prime Global Cities Index, Q2 2012, which tracks the performance of the top 5 percent of mainstream housing markets has revealed prime prices throughout Asia to have risen by 3.4 percent in the year to June, whereas the equivalent figure in March was -3.4 percent.
The market resurgence in Asia in the second quarter can be mostly attributed to the strong performance of certain emerging markets, in particular Jakarta and Bangkok, which was the strongest market performer in the survey, up by 29 percent over the last twelve months. The two emerging markets contributed more to the performance than Asia’s traditional industry powerhouses, Singapore and Hong Kong.
The European debt crisis is thought to still be a large factor in terms of property investment, with buyers and developers seeking prime property which are largely sheltered from the effects. Outside of Asia, London, Geneva, and Zurich all ranked in the top half of the Q2 results, having recorded annual price growth of 10.5%, 6.0%, and 5.9% respectively. According to Knight Frank’s International Residential Development team member, James Price, the relative safety of more established cities in Europe and the US remains the defining characteristic sought after by buyers and investors.
“The appeal of cities in stable economies is being brought into marked contrast with the investment environment in weaker countries. This city-level data should not however be taken as a reflection of the whole country; prime second-home destinations outside the cities may still perform well in a poorer performing wider market.” Said Price.
This attraction towards ‘safer’ locations that are relatively unaffected by the economic situation in Europe could explain why more and more investors are turning their heads towards locations in South East Asia. Despite the positive results noted in the second quarter, speculation concerning the overall outlook for the world’s prime markets remains muted. It is generally agreed that significant sustained growth is unlikely given the multitude of risks currently facing the global economy.
The economic frailty of Europe combined with protection measures being introduced throughout Asia in order to improve affordability for domestic buyers is expected to restrict price inflation within the both the prime and mainstream markets for the remainder of 2012.
