Luxury property prices on the up in Asia

The value of luxury property in the Asia Pacific region rose in the fourth quarter of 2012, according CBRE. Prices jumped by 1.5 per cent quarter-on-quarter, slower than the 2.4 per cent growth in the third quarter.

Prices continued to record steady growth in China due to sustained demand for upgrading, although increases were generally smaller than in Q3 2012. In Southeast Asia Bangkok, Kuala Lumpur and Manila recorded price gains as buyer sentiment remained positive amid continued economic growth.

The CBRE Luxury Residential Rental Index fell by 0.7% q-o-q in Q4 2012, bringing an end to the growth witnessed in previous quarters. Rents weakened in Hong Kong, Ho Chi Minh City, Kula Lumpur, whilst were flat in Singapore, New Delhi and Mumbai. The more subdued rental market was primarily due to weaker demand from expatriates as multinational corporations continue to cut costs.

Market fundamentals including steady demographic growth, urbanisation and the rising number of high-net-worth individuals in the region will support further price growth in the luxury residential sector over the course of 2012. The limited supply of high quality residential stock in first-tier Chinese cities and selected Southeast Asian market, including Bangkok and Manila, will provide additional momentum to price appreciation in these markets.

However, cooling measured will remain in place during 2013 and will limit price growth to a certain extent. Authorities may be prompted to roll out additional measured to rein in speculative and investment demand in selected markets amid concerns over housing affordability. The easing market is expected to weaken further as multinational corporations keep a li on costs, a trend that will exert down pressure on rents.

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