Singapore's luxury residential prime market down 2% for Q1

So which cities in Asia have the highest for the quarter?

According to the 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% in Q1 and in the twelve months to end 1Q12, delivered the strongest price performance among the monitored markets, with growth of about 16%.

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

Average prices in Singapore’s luxury prime market declined by 2% 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 % quarter on quarter, while average prices in Beijing fell by 2.3%, as tightening policies remain in place and sales volumes are down in the China Tier I markets.

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 strengthof 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.”

Dr YangLiang Chua, Head of Research Singapore and South East Asia, Jones Lang LaSalle said: “While the Singapore high end market remains weak on the back of additional stamp duty imposed on foreign buyers introduced in December 2011, mass market activity remains particularly upbeat in the primary market. This divergence is unlikely to sustain for long as the genuine occupier demand, as measured by the sales activity level in the secondary market, is pale in comparison to the primary. In our opinion, the highly discretionary sales in the primary market are motivated largely by the low interest rate environment further fuelled by the progressive payment structure that buyers of new launches enjoy. Secondly, risk of further government intervention could cap the new sales market going forward.”