KUALA LUMPUR: THE year 2016 has been interesting for some residential markets in the Asia-Pacific region with a huge divergence in terms of price performance and activity, says London-based global real estate consultancy Knight Frank.
According to its latest report titled “Asia Pacific 2016 Round-up and 2017 Outlook”, China continued to dominate headlines last year with residential markets in its Tier-1 and Tier-2 cities experiencing strong price increases.
The price growth was so high that policymakers had to come up with measures to cool off the markets.
This also happened in other markets in the region such as Hong Kong, which saw a further hike in stamp duties, and Australia, where more taxes were imposed on foreign buyers in several states.
For Southeast Asian countries, there were both cooling measures and slow economic growth which led to sluggish performance in the property market, especially in Malaysia and Singapore.
Indonesia and Thailand also experienced a slowdown in activity.
Knight Frank Asia Pacific head of research Nicholas Holt said this year was likely to see markets responding to two things — the wider economic environment and policymakers’ actions.
In the post-Brexit and Donald Trump era and with the likely demise of the Trans-Pacific Partnership, global uncertainty will continue to cloud economic growth prospects.
This is expected to have a direct impact on residential property transactions.
Policymakers’ actions would also continue to have an impact on the market this year.
Knight Frank Malaysia managing director Sarkunan Subramaniam said 2016 had been subdued and expected the same this year.
Developers would implement strategies to attract and improve sales to counteract lower consumer demand due to the current state of economy, he said.
On the investment front, Sarkunan said vendors would have more realistic expectations and purchasers were looking for bargains, hence this could lead to more sales activities.
Knight Frank Singapore head of consultancy and research Alice Tan calls 2016 a year of twists and turns with unprecedented global events unfolding, namely the Brexit referendum, Trump’s victory in the US presidential election and a slowing China economy.
These had impacted Singapore’s economic growth and business sentiment, she said.
Tan said as economic restructuring and moderating employment prospects set in, almost all segments of the property market — residential, commercial and industrial — had experienced weaker performance in price and rentals, which hit new lows in the third quarter of last year.
“Looking into 2017, should market conditions weaken further and more units be released into the market as developers strive to meet project deadlines, there could be further price adjustments,” she added.
Meanwhile, Knight Frank Australia head of research and consulting Matt Whitby said there continued to be divergence in the short-term market conditions with rental growth performance in favour of Sydney and Melbourne.
However, he expected investment and occupier demand to pick up in Brisbane this year as investors began to embrace more risk and seek higher relative returns.
Whitby said investment in Australia, particularly in office and hotel buildings, had been growing strongly, supported by the relatively higher yields still available in the market.
“Sydney’s office leasing market is expected to be the best rental performer globally over the next few years to the end of 2019,” he added.