New government will positively rebound property market

The new government is expected to support property growth, as demand for residential properties is on the increase.

Joko Widodo and Jusuf Kalla’s success in winning the presidential race is believed to be influential towards accelerating the property market during the second half of 2014, as numerous property developers and investors have left speculation mode in terms of investment.

The peaceful political process has also been viewed positively, strengthening market confidence towards the future of the country’s property sector. Additionally, active transactions were viewed during the month of Ramadhan and Idul Fitri, further signalling optimism that the property market is bouncing back.

Hendra Hartono, property consultant and CEO of Leads Property Indonesia, alongside Joyp Rusli, chief marketing officer of Lippohomes, expressed confidence in the property sector for the third quarter this year. 

Hendra claimed generally, the property sector is assured to return to normal and demonstrate positive growth. Industrial and retail subsectors are strengthening. Industrial zone developments, typically long-term investments, will follow infrastructure development prioritised by the new government.

The need for apartments within the suburbs has escalated to a level of real demand, as opposed to being just one implement for investment three to five years in advance. 

Jopy reported the large demand for residential properties is not only within first-tier cities, but also within suburban regions with limited space and high values. Plus, the need for transport links and main infrastructure.

Furthermore, urbanites require comfortable residences, in proximity to their work locations. Apartments have been found to be a major choice offering practicality and security.

Limited land availability alongside its rising costs, heavy traffic and a growing population, as well as a high urbanisation rates, are some of the major factors behind the demand for apartments within suburban regions including Bekasi, Bintaro, Depok and Serpong.

The demand relates to city spatial planning, the requirement for green spaces as well as the need for practical, secure and comfortable living.

Additionally, that the trendiest suburban apartments were those assimilated with other property projects – integrated developments. These were complete with shopping centres, healthcare and other facilities. 

Research head at Cushman & Wakefield international property consultant agency, Arief Rahardjo, previously expressed that the July presidential election had not had great impact upon the condominium market of Greater Jakarta (Bogor, Depok, Jakarta and Bekasi – Jabodetabek). 

This is supported by the sales and pre-sales activities, revealing a slight increase during the second quarter.

Mid-level condominiums continue to dominate developed units, contributing approximately 52% of total sales. In terms of segments, pre-sales of low level, mid-level, mid-to-high level and high-class condos recorded sales of 63.8%, 67.5%, 57% and 67% respectively.

Over 60% of people who purchase condos purchase them as means of investment; indicating a strong sentiment for property investment.

Indonesia Property Watch previously reported positive growth experienced in the property market of the Jabodetabek fringe areas.

Despite an overall decline within the national property sector, analysis indicates that the property market is emerging in regions beyond Greater Jakarta as well as outside Java.

The price rises in Jabodetabek were around 15 to 20%. On the other hand, the decline in sales reached an average of 49%.

Developers of Jabodetabek have begun to alter their businesses from landed residential to vertical residential properties, evident in the rising number of mid-level apartment projects and companies’ readiness to expand beyond Jabodetabek.

It was revealed the potential development in Sumatra, including Lampung, Medan and Riau, as well as regions of Central Java, Kalimantan and Manado. High growth has also been visible in Malang and Surabaya of East Java; Cikarang and Karawang of West Java; Makassar, South Sulawesi; Lampung province; and Balikpapan, East Kalimantan.

Meanwhile, Hendra explained the office space sub-sector remains stable as businesses have been planning expansions for some time. Those intending to relocate tended to opt for leases extensions for a few more years. 

As long as the current political and security situation stays stable, investors should continue to arrive. Similarly for foreign capital, as Indonesia continues to be one of the key targets for investment within Asia’s property sector.