Jakarta, Kuala Lumpur and Phnom Penh topped the list of Asian cities
that registered strong price growth in the Inaugural Prime Asia
Development Land Index of international real estate company Knight
the Thai capital, prices of prime residential land soared by over
190% in the last 24 months.
younger markets from Southeast Asia beat the more mature markets of
Hong Kong, Singapore and Tokyo that logged the lowest price growth.
Frank developed the index by using a repeat residual valuation method
in which the real estate firm looked at what a reasonable developer
would be expected to pay for development land based on the gross
development value of the potential scheme. It also considered costs
such as construction, professional fees, contingencies, financial,
required profit, acquisition costs and taxes.
index tracked 25 of 26 Asian markets and found 50.4% increase for
residential land index over the last two years and 38.3% for office
index report noted the stiffer competition for prime development
sites and more developers and investors seeking opportunities
overseas as indicated by the 55% year-on-year hike in intra-Asian
cross border developments the drove upward price adjustment cost of
Holt, Knight Frank head of research for Asia Pacific, said that the
index, the first on development land prices in terms of size and
scope, would become a vital resource for developers, investors,
financers and policy makers.
added, “A key observation from our findings points to the fact that
in developing Asia we are seeing low liquidity and rapid land price
appreciation, whilst in developed Asia such as Hong Kong, Singapore
and Tokyo, we see the highest land prices and redevelopment
explained that the insufficient supply of prime development land in
mature markets led developers in these places to emphasis more on
redevelopment opportunities. Holt said that developers from these
markets are under more pressure to develop quickly due to the higher
cost of land and high holding taxes in some cases.