Europe and Asian prime markets set for mixed 2012

European and Asian residential prime city markets are expected to have a mixed 2012 according to consultancy firm Knight Frank, while government intervention and economic uncertainty looks set to dampen prices in Asia-Pacific.

In its Prime Global Forecast, Q4 2011 edition, Knight Frank says “price falls are expected in 44% of cities, no change in 12% and rising prices in 44%”.

Eastern European cities such as Moscow, St Petersburg and Kiev are forecast the largest growth in the continent. However, Knight Frank Resident Research’s Kate Everett-Allen believes that there is a lack of continuity across the table.

“Perhaps the most interesting trend is the lack of homogeneity across the continent,” she said. “In Europe, Geneva and Madrid will, we believe, see prices decline in 2012, but we expect Moscow and Paris to be among the strongest performing markets.”

Asian predictions are also diverse, with Knight Frank believing Bangkok, Beijing, Kuala Lumpur and Jarkata will experience rises …  while the likes of Shanghai, Mumbai and Hong Kong will fall.

“In most cases these price falls have been partly driven by government regulation,” Everett-Allen added. “These steps were bolstered in recent years, as concerns over speculative investment rose and rising household wealth created price pressures.”

“The measures have proved hard-hitting and have included curbing multiple home ownership, halting bank loans for uncompleted projects and increasing interest rates.”

Liam Bailey, head of residential research at Knight Frank, said that continued international investment to safe-haven prime property purchases could prove risky.

“[In Europe and North America] the continued outperformance of the top-end property markets, alongside wider poor economic prospects, has already created a political backlash in some locations, and the potential for further targeted tax and regulatory changes to reduce perceived wealth inequality is not impossible.”

However, Bailey added, “The situation that prime markets in Asia-Pacific face is very different, with political action focused on dampening down and controlling price growth.”




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