Asia Pacific Property Market Performing

Knight Frank reports that Indian and Indonesian real estate markets are improving, although the growth is balanced across sectors, with Bangkok and Jakarta taking the lead as standout …

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Knight Frank reports that Indian and Indonesian real estate markets are improving, although the growth is balanced across sectors, with Bangkok and Jakarta taking the lead as standout performers in their respective countries. All Indian cities are not performing equally, however, and although overall rates are up there are several areas like Jaipur and Indore that feel during the second quarter of 2012. Polarization is also occurring within Bangkok as tight supply pushes prices up in the city while more supply on the edges is helping ease prices. For more on this continue reading the following article from Property Wire

India’s residential property market continued to expand in the second quarter of 2012 and the performance of the Indonesian residential real estate remained solid.

Jakarta and Bangkok were the outstanding prime residential market performers, with year on year price growth pushing 30%, the new Asia Pacific Residential Review report from Knight Frank shows.

While in Jakarta, this positive price appreciation is in parallel to the rest of the housing market, in Bangkok, this is in contrast to mass market price drops, as luxury condominiums in tight supply situated off Sukhumvit have seen their prices pushed upwards, the report says.

Indonesia’s strong performance continues and the introduction of a Loan to Value (LTV) cap of 70% in July has not held back demand as positive buyer sentiment continued to fuel price growth in the Jakarta market, it points out.

In the second quarter of 2012, house prices increased 1.2% across Indonesia, with the CBD Jakarta condominium market subjected to the strongest demand, increasing 16.7% year on year.

‘With strong fundamentals, confidence in the development market remains strong, with development activity remaining unabated,’ the report says.

In Thailand overall the market is slowing as demand plays catch-up. The years so far has seen less supply come onto the Bangkok condominium market, as existing stock is slowly absorbed.

‘Consequently, listed developers have tended to diversify towards the resort destinations of Phuket, Pattaya and Hua Hin where the demand and supply dynamics are more favourable,’ says the report.

In Bangkok, with surprisingly little difference in selling prices of condominiums in the city and city fringe areas, buyers tend to favour condominiums in the city area, while demand for luxury condominiums in the heart of Bangkok remains high, with supply tight and few projects launching this year.

The report also points to a significant polarisation in the price performance of the Indian residential market. Although average prices grew by 3.3% in the second quarter of 2012 across the whole country, this average masks difference between cities, with Bangalore, Pune and Patna notably booming, while Hyderabad, Jaipur and Indore seeing price falls during this period.

Pune saw the highest price rise, up 10% whereas Jaipur saw prices fall by 3%. The report says that macroeconomic instability over 2012 in India has meant residential markets that rely more on speculators have shown more volatility in terms of pricing, whereas markets that rely on predominantly owner occupier demand have been more stable.

Looking ahead to next year Knight Frank says that in Indonesia, with huge amounts of new supply scheduled to come to the market between now and 2014, developers will have to ensure that the concept, design and pricing is right to profit from the forecast increase in demand.
 
In Thailand, the firm expects price performance of the Bangkok condominium market to polarise between city centre and periphery locations. ‘On the periphery, with large amounts of new supply in the market we expect more price competition leading to softening prices, whereas with more limited supply available in the city area, we expect more upward price Pressure,’ says the report.

In Vietnam, the huge credit growth of preceding years is coming back to haunt banks, who have record amounts of bad debt related to the real estate sector. ‘We expect the market to continue to be troubled, with the relative slowdown in the economy continuing to put downward pressure on residential prices. This does however provide opportunities for buyers who can secure funding,’ the report explains.

India is likely to see more polarisation across city’s performances going forward as the economy absorbs some of the significant reforms that have been implemented over the last few weeks.

This article was republished with permission from Property Wire.

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