The day is not ending well for the prime residential development properties dues to the fact that the land price increases in Asia are slowing down. According to a recent report by knightfrank.com, "The price of prime residential development land in Asia slowed to 1.1 percent in the first half of 2015, down from 3 percent in the previous six months."
However, although the prime residential development has slowed down, the prime office land increased by 3.6 percent, up from 2.5 percent. What caused the decline? The foreign investment continued to fuel strong performance in the residential sector, but growth decelerated in the second quarter, suggesting that prices are peaking and the momentum will likely moderate in the second half of the year as stated in an earlier report by propertywire.com.
Among the most affected market in Asia is in China. The land sales in China fell by 54.8 percent. It occurred when the local governments in the nation lessened the land supply and upheld hostile pricing. This strategic approach was utilized by China as their main source of revenue.
Due to this approach, the developers are affected as well. As a consequence, developers in China face a double whammy of high land prices and weak sales as stated in a previous report by propertywire.com.
Challenges such as the recent stock market crash, prevented the developer's ability to raise the capital that they needed due to restrictions. Anecdotally, more developers are partnering with other firms to pool financial resources and pursue an asset light strategy as indicated in an earlier report by propertywire.com.
Other nations that were also affected are Bangkok, Jakarta, Tokyo and even in Mumbai. The situation is similar. There is a deceleration in price index movements. The economic slowdown has affected both the business and consumer confidence in these countries. While foreign purchase of land in the region as a whole also slowed, regions in Southeast Asia saw a fourfold jump as stated in a previous report by propertywire.com.