First Asia development index shows rising land prices

Photo credit:   Yohanes Budiyanto

The growth in prices is being fuelled by an imbalance between supply and demand, reports Knight Frank’s Prime Asia Development Land Index, which was published this week for the first time.

The research tracks 26 major market across Asia and reveals that in the two years from December 2011, 24 (13 residential and 13 office) saw an increase in their indices.

Southeast Asian markets lead the price growth for prime development land: Bangkok, Jakarta, Kuala Lumpur and Phnom Penh make up 4 of top 5 cities in terms of price growth. The mature markets of Hong Kong, Singapore and Tokyo, on the other hand, saw the lowest price growth, which has led to more emphasis on redevelopment opportunities.

Prime Asia residential and office development land indices have risen 50.4 per cent and 38.3 per cent respectively over the last two years.

With competition for prime development sites remaining as strong as ever, increasing numbers of developers and investors are looking overseas for opportunities. Indeed, Knight Frank reports evidence of a 55 per cent rise year-on-year in intra-Asian cross-border developments driving price growth in development land.

“As the first-ever Index on development land prices of its size and scope, this will become an important resource for developers, investors, financers and policy makers,” comments Mr Nicholas Holt, Head of Research for Asia Pacific.