The brakes were squeezed on Asia’s land development in the first half of 2014, with Beijing bearing the brunt of the decrease in land prices.

The brakes were squeezed on Asia’s land development in the first half of 2014, with Beijing bearing the brunt of the decrease in land prices.

Although prices for land in Asia were still growing positively in the first half of 2014, the rate of growth decelerated. While in the first half of 2013 office and residential sites grew 9.8 per cent and 7.7 per cent respectively, these fell to 4.9 per cent and 2.9 per cent over the past 12 months.

The figures come from Knight Frank’s Prime Asia Development Land Index, which partly attributes the region’s decline on the slowdown in the Chinese economy.

While in 2013, $500 billion was invested in Chinese development sites valued at over $10 million, investment struggled to keep up in the first half of 2014 with just shy of $200 million invested - only 37.6 per cent of the total invested in 2013.

The Guangzhou residential market decreased by 1.2 per cent in the second quarter, while Beijing’s residential market fell by -2.5 per cent in the first half of this year.

Despite a prosperous year to June 2014 in Shanghai’s prime residential site market with 18.8 per cent growth, it logged a 0.6 per cent drop in prices in the second quarter of this year.

The top three cities in terms of prime residential land price growth were Bangkok, Phnom Penh and Jakarta, whose value grew 18.2 per cent, 13.7 per cent and 11.6 per cent respectively. Bengaluru, which came in fourth, topped the list of prime office land growth with an increase of 9.2 per cent, swiftly followed by the continually prosperous Jakarta and Phnom Penh.

Knight Frank attributed Phnom Penh’s success to the opening of The Bridge and skyscraper Vattanac Tower, which spiralled record condominium (≥$3,000 per square metre)  and office rent prices (≥$25 per square metre). Bengaluru’s growth was due to the emergence of newer sectors besides information technology in India’s Silicon Valley. The firm warned, however, that despite Jakarta’s ranking, prices of premium residential properties are beginning to slow in the Indonesian capital.

Hong Kong saw the biggest declines in both its prime residential and office land development, with falls of 4.9 per cent and 4.4 per cent respectively. Nicholas Holt, Asia Pacific head of research at the firm, attributed this to the region’s “confluence of softened property prices, as a result of cooling measures, elevated construction costs and uncertain external economy”.

While Abenomics has not escaped criticism, it helped to drive up Tokyo prime office rates 5.8 per cent in the first half of this year as improved corporate earnings grew. Furthermore, domestic and foreign investors put pressure on the cap rate.

Despite the 5 per cent decline in prime residential and office land transaction volumes in Asia, international investment still flowed into the continent. Year-on-year inflows from outside Asia increased by 423.9 per cent.