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High End Residential Prices Growing Strongly in Jakarta

Jones Lang LaSalle Issues Q1 2012 Asia Pacific Residential Index

SINGAPORE, 14 May 2012 – Average high end residential prices in eight key markets in Asia Pacific rose by one percent in Q1 compared with Q4 of 2011, according to Jones Lang LaSalle’s latest Residential Index. Hong Kong, Bangkok, Kuala Lumpur and Jakarta showed increases in Q1, Beijing, Shanghai and Singapore showed declines whilst Mumbai was stable.

• Jakarta was up 4.3 percent in the first quarter of this year and in the twelve months to the end of Q1 2012, delivered the strongest price performance among the monitored markets, with growth of about 16 percent.

• After declining over the past six months, luxury residential prices in Hong Kong showed initial signs of stabilizing, up 1.4 percent quarter on quarter, largely due to low interest rates and more active mortgage lending by banks.

• Average prices in Singapore’s luxury prime
market declined by 2 percent quarter on quarter after remaining stable for six consecutive quarters on the back of on-going rental adjustment.

• Capital values for luxury apartments in Shanghai fell by 1.2 percent quarter on quarter, while average prices in Beijing fell by 2.3 percent, as tightening policies remain in place and sales volumes are down in the China Tier I markets.

• Kuala Lumpur saw high end capital values up by 6.9 percent in Q1, due to some additions to its stock (capital values would have been largely stable ignoring the change to stock).

Todd Lauchlan, Country Head, Jones Lang LaSalle Indonesia said: “The first quarter increase is a continuation of a trend we have witnessed over the last 18-24 months in the Indonesian residential market, where price increases have been consistently pushed through by developers on the strength of robust demand levels. Demand is being driven by significantly increased affordability, and with record low interest rates, high consumer confidence levels and strong income growth we expect to continue to witness the rise of the Indonesian middle class.”

Luxury residential prices in Hong Kong showed initial signs of stabilizing after declining over the past six months, while growth in some emerging South East Asian markets helped to offset price declines in Singapore and China. The sales markets showed mixed performance, with slightly more buoyant activity in Hong Kong and Singapore late in the first quarter, while China continued to record fewer launches and sales.

Looking ahead, Dr Jane Murray, Head of Research, Asia Pacific, Jones Lang LaSalle said: “Prices in China are expected to decline further over the next 12 months, as policy restrictions are likely to remain in place and developers are likely to introduce more price discounts. Prices in Hong Kong and Singapore are also expected to decline over 2012, as a result of projected rental correction, generally weaker investor sentiment as well as policy risks. That said, the extent of price correction in Hong Kong will likely be limited by the tight supply situation. Among emerging South East Asian markets, the Jakarta sales market should see the strongest price growth on the back of a strong economy while prices in Kuala Lumpur and Bangkok should be largely stable.”