Emerging South East Asian cities are leading the charge in luxury residential capital value growth across Asia, according to the latest property index from real estate consultants Jones Lang LaSalle.
Jakarta and Manila registered double digit increases of 19.2% and 10.5% respectively in the 12 months to the end of the second quarter of 2012.
Meanwhile, Hong Kong, Singapore, Shanghai and Beijing have seen annual declines in high end residential prices of up to 8%, the index also shows.
Across monitored luxury residential markets in Asia as a whole, average capital values remained largely stable with an increase of 0.8% quarter on quarter, similar to the 1.1% quarter on quarter increase recorded in the previous three months.
Luxury residential prices in Hong Kong increased by 2% during the quarter due to more active mortgage lending by banks and improved market sentiment but prices in Singapore fell by 2.9% on the back of ongoing rental declines and property cooling measures.
In China, prices in Beijing fell by 2.7% due to tightening policies in place and some price discounts by developers, although Shanghai did see a marginal increase of 0.3% for the quarter.
Jakarta outperformed all monitored markets in Asia, supported by strong underlying fundamentals. The index report says that the city is set to see the strongest price growth for the rest of 2012 due to solid local demand.
‘Jakarta has outperformed its neighbouring markets once again this quarter in the high end residential sector. The market has been fuelled by strong wage and employment growth, low interest rates and high consumer confidence. We expect this upward trend to continue for the rest of the year, in line with projections that Jakarta will see the strongest price growth in the luxury residential space in 2012,’ said Todd Lauchlan, country head, Jones Lang LaSalle Indonesia.
Looking ahead, Jane Murray, head of research, Asia Pacific, Jones Lang LaSalle said that prices in China are expected to soften further in the second half of 2012 with policy restrictions likely to remain in place, although tight supply in prime locations will likely limit price discounts by developers.
‘Rental correction, government policies and generally weaker investor sentiment should underpin further price declines in Singapore in the second half of 2012. On the other hand, Hong Kong prices are expected to stay relatively flat in the last half of 2012 because of tight supply and low holding costs,’ she explained.