Prime residential development land prices in Asia fell by 1.1 percent in the first half of 2015, down from three percent in the second half of 2014. There was some good news; however, as prime office land increased to 3.6 percent, the Knight Frank Asia Development land index recorded.
Phnom Penh showed the biggest gain in both prime residential and office land price, according to the index. Prime residential prices in the Cambodian capital shot up 14.1 percent and commercial land prices trended upward to the tune of 9.7 percent. Foreign investment continued to fuel strong performance in the residential sector but growth decelerated in the second quarter. It is likely prices have peaked, and the second half of the year will see less growth, the reported added.
The price index for office land was flat in the first half of this year for Bangkok. Developers instead focused more on the luxury condominium market, where continued capital appreciation afforded them higher profit margins. However, a limited office supply in Bangkok has seen occupancy rates remain high. Residential land prices grew at a steady and sustainable rate.
Kuala Lumpur and Singapore’s high-end housing markets continued to soften due to cooling measure in each country, strong supply and, in Malaysia’s case, the implementation of a Goods and Services Tax. Home prices in Kuala Lumpur have fallen three quarters in a row while Singapore had recorded a decline in eight consecutive quarters. Commercial land in both cities continues to be strong, however.
The report noted that Jakarta has suffered slowdowns in both the commercial and residential sectors due to an economic slowdown that has impacted both business and consumer confidence in the country. A proposed luxury tax hike in Indonesia has also added to the recent decline in the residential market. There was a bit of good news as land prices at prime locations are expected to stay steady.
Demand for land is set to increase across Southeast Asia at the end of the year as the ASEAN Economic Community (AEC) finally gets underway. The free flow of goods, services and labour should encourage the movement of industries, driving demand for both commercial and residential space.
