Knight Frank launches Residential Review for June 2014. The report looks at 13 cities in Asia Pacific and highlights potential or actual hotspots as a result of new transport corridors and changes in urban mass transit systems.
According to the latest information from local authorities in the region, nearly 70% of additional metro lines are either under construction or planning between now and 2020 across key cities in Asia. Albeit with a high capital cost, infrastructure development can stimulate house price outperformance for those areas benefiting from improved connectivity, access and reduced commuting times.
Of the cities analysed, Tier 1 Chinese cities have the most significant amount of new metro line planned over the coming years; while elsewhere Mumbai has just opened its first metro line, and Jakarta is scheduled to open its first metro line in 2018.
Take Line 7 in Beijing for example, it has a total length of 23.7 km with 21 stops and is expected to be completed by the end of 2014. When Line 7 is launched, transportation in this area will be improved dramatically, which is expected to drive up the house prices around Wufang Bridge and Huagong Bridge along 5th Ring Road by over 20%. These two bridges are around 1km from Jiaohuachang Station, at the end of Line 7. House prices in this area are currently in the range of RMB 23,000 to RMB 30,000 per sq m.
Nicholas Holt, Head of Research for Asia Pacific, says, “The level of infrastructure in a market is a useful indicator as to the level of development while also a guide to the potential for catch-up. We must distinguish between different levels of infrastructure; national, intra-regional, and local. While airports, national rail networks and interstate highways are all indispensable elements of transport infrastructure; urban mass transit systems, within a city’s boundaries, have a more obvious impact on a local, residential level.”
Snapshot of the region’s residential markets as at June 2014:
• The Chinese housing market starts to turn, Thailand remains resilient, Malaysia sees new cooling measures and Australia continues to see strong price performance.
• Eight of the 11 mainstream residential markets in Asia-Pacific saw house prices increase in Q1 2014, as reported in Knight Frank’s Global House Price Index.
• On a kilometre per million of population basis, Seoul tops the regional rankings with 40km of metro line provided to every million residents, followed by Tokyo and Singapore with 36km and 33km respectively.
Mainland China an increasingly important player in developing Asia
China is the largest spender on infrastructure projects in the world, having funnelled a huge amount of capital into the sector over recent years. The country is also a key exporter of capital, increasingly involved in overseas infrastructure project financing around the region; from the Kunming-Singapore railway line, to projects across developing Asia. This is not only being driven by a desire to invest its accumulated capital overseas, but also to boost its geopolitical influence in the region.
On China’s investment in infrastructure, Nicholas added, “We see China playing an increasingly important role in developing Asia. The Asian Infrastructure Investment Bank, Asia Development Bank along with other sources of finance (non-bank) will be important in developing Asian markets such as India, Indonesia, Cambodia, Vietnam and Myanmar over the coming years.”
Knight Frank Asia Pacific Residential Review June 2014/div>