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News Release

Asia’s luxury residential market sees growth moderation

Capital values rise 1.6% over 2Q2011


Bangkok 9 August 2011 - Average capital values rose only 1.6% over the second quarter of 2011 across monitored luxury residential markets in Asia, slowing from the 1.8% pace recorded in the previous quarter. Of the eight featured luxury residential markets, four saw an increase in capital values during the quarter, while prices remained stable in three cities and declined in Beijing, according to the recent Residential Index from Jones Lang LaSalle’s research team.
 
City
Quarterly Change
2Q11 vs 1Q11
Yearly Change
2Q11 vs 2Q10
Hong Kong
7.3%
28.3%
Beijing
-1.9%
3.8%
Shanghai
0.0%
2.2%
Singapore
0.0%
0.0%
Bangkok
1.9%
3.7%
Kuala Lumpur
0.3%
9.3%
Jakarta
5.0%
8.1%
Mumbai
0.0%
3.7%

Notes:
  • Capital values are on a net lettable area basis
  • Percentage changes are on a local currency basis
  • Luxury residential properties include apartments, condominiums, detached and semi-detached housing that are located in traditional prime areas.
Despite strong growth of new supply, resale prices of luxury condominiums in Bangkok registered a 1.9% increase over the 2 nd quarter of 2011 or a 3.7% increase from the 2nd quarter of 2010. The rise in resale prices in Bangkok over the past 12 months was driven mainly by continued demand from buyers backed by a number of factors including a wider choice of products, rising residential rents, low interest rates, higher replacement costs, and buyers’ desire to purchase property as an inflation hedge as well as the country’s improving political and economic outlook.
 
In Hong Kong, though the government launched the latest round of measures aimed at curbing speculative demand, luxury residential prices in Hong Kong grew strongly by 7.3% in the second quarter of 2011, due to the continued low interest rate environment, progressive rental growth and limited supply in the market. In the twelve months to the end of the 2 nd quarter of 2011, Hong Kong delivered the strongest price performance among the monitored markets, with growth of around 28%.
 
On the other hand, prices in Singapore’s luxury prime market remained stable for the fourth consecutive quarter as buyers remained cautious after recent government tightening measures. While developers are not actively increasing their selling prices, they are also resisting deflating the asking prices as these developers have built up enough holding muscle over the past few years of stellar performances.
 
In the China Tier I markets though sales volumes fell, capital values remained largely unchanged for luxury apartments in Shanghai, though average prices in Beijing fell by 1.9% in the 2 nd quarter of 2011.
 
Outlook
 
Luxury residential prices in Asia are generally likely to remain stable or see slower growth for 2011 due to ongoing policy and interest rate risks. Prices in China are expected to either remain flat or edge down slightly over the rest of this year as developers will likely introduce more price discounts and launch less high-priced units over the next 12 months. Prices in Hong Kong and Singapore should remain largely stable over the second half of 2011, buoyed by continued demand from end-users and long-term investors.