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Activity in major Asian luxury property markets slowing

That is down from the 1.8% recorded in the previous quarter and prices are also showing a steady decline, the Residential Index from Jones Lang LaSalle’s research team shows.

Price growth has slowed steadily from the 7.4% quarter on quarter pace recorded at the end of 2009, as sales activity cooled with fewer launches and sales recorded in most markets.

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.
Despite the latest round of government 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 continuing rental growth and tight supply. In the last 12 months 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.
Despite falling sales volumes in the China Tier I markets, capital values remained largely unchanged for luxury apartments in Shanghai, though average prices in Beijing fell by 1.9% quarter on quarter.

‘In Hong Kong, we saw a continued growth in luxury residential prices last quarter of 7.3% as a result of the continued low interest rate environment, progressive rental growth and limited supply in the market. We saw a growing percentage of mainland Chinese buyers in the luxury residential market, despite the decline in capital values in Beijing,’ said Joseph Tsang, managing director and head of Capital Markets, Hong Kong.
Luxury residential prices 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.
‘Despite the low interest rates environment, capital values for the Singapore luxury residential market is expected to remain stable. This could be a result of a successful government intervention in tightening measures as well as a sustained cautious mood over the global economy,’ said Jacqueline Wong, head of residential for Jones Lang LaSalle Singapore.

‘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,’ she explained.

‘While Singapore is establishing itself to be a favoured global city to live in, there has also been more long term high net worth investors placing Singaporean real estate into their portfolio. This profile of investors has helped stabilized capital values away from speculators,’ she added.