| Comments 1 Luxury real estate prices in Shanghai rose only 0.4 per cent in Q1 2011. Values of luxury residential properties across Asia continued

| Comments 1

Luxury real estate prices in Shanghai rose only 0.4 per cent in Q1 2011.

Values of luxury residential properties across Asia continued to slowly rise in the first quarter of 2011. As with the last quarter of 2010, values rose 1.8 per cent, according to Residential Index data from Jones Lang LaSalle.

This is a slowdown from the hectic third quarter of 2010, when prices grew by 7.4 per cent.

The cooling pace comes after various governments enacted anti-speculative measures in 2010.

The index data comes from monitoring major Asian centres including Hong Kong, Beijing, Shanghai, Singapore, Bangkok, Kuala Lumpur, Jakarta and Mumbai. Of these cities, only Kuala Lumpur residential prices showed a slight drop in value of 1.1 per cent over the first quarter, while capital values in Hong Kong showed the greatest increase at 8.3 per cent.

On the Chinese mainland, sales were quiet over the first quarter after new rules were introduced to curb the hot market. Bans on new purchases from owners who already have two apartments and a pilot property tax kept first quarter price increases in Beijing and Shanghai relatively minor at 3.2 per cent and 0.4 per cent respectively.

Despite the current restrictions in China, Chinese buyers will likely still have an effect on other markets within Asia. “The growing pool of high net-worth individuals from mainland China will not only lead to a structural change in buyers’ profile in Hong Kong’s luxury residential market, but will also gradually raise demand for high-quality residential properties in other Asian cities, where the investment environment and social infrastructure are good,” said Joseph Tsang, managing director and head of capital markets at Jones Lang LaSalle, Hong Kong.

Residential prices in China are expected to remain stable or decrease slightly in 2011 due to probable price reductions by developers, and the introduction of fewer high-valued units.

Meanwhile, strong end-user demand and long-term investors will likely see the luxury markets in Hong Kong and Singapore increase in strength.

By Christopher Cox