The performance of the world’s luxury housing markets in 2011 was highlighted by the flight of capital markets from emerging economies to new safe havens.
In Asia, however, the media spotlight focused on a potential property crash in China.
Knight Frank and Citi Public Bank’s Wealth Report 2012, A Global Perspective on Prime Property and Wealth, singled out China’s housing market as the most important sector in the global economy.
Last year, China’s construction sector accounted for 13 percent of its gross domestic product (GDP), 20 percent of global steel production, and was the dominant consumer of the world’s iron, copper and cement. As such, the performance of China’s housing market mattered a lot.
While prices have generally fallen across ‘tier-one’ cities across China, prime markets have performed slightly better, albeit at a slower pace. For instance, Beijing saw luxury property prices rise by a healthy eight percent last year, buoyed by a strong first half performance.
“Shanghai prime prices may have fallen 3.4 percent in 2011, but they are still 37.5 percent higher than they were in early 2009,” said Thomas Lam Ho Man, Head of Research for Greater China at Knight Frank.
In addition, the Chinese government has made an effort to halt runaway prices.
The attempt to control prices has pushed investors to consider other alternatives such as commercial property and prime residential property in Hong Kong.
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