Office space in Jakarta to increase

Foreign investors looking to expand their presence in Indonesia over the upcoming four years will find generous office options to choose from in Jakarta, according to a report from worldwide real estate services firm Colliers International.

Whilst total office space in Jakarta rose by just 1% during the first half of 2014, the capital will see an accumulated 10.7million square metres of new office space developed by 2018, up 51% from today‘s 7.1million square metres, according to the report released last Wednesday.

The projection assumes 74 buildings currently under construction or being planned will be completed on schedule. The increase will result in a decrease in office occupancy to under 90% from 96% at the end of the former half.

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Expanding Indonesia - More apartments being developed in response to demand

With continuing economic growth in Indonesia, giving increase to higher per capita GDP, the property market is still rapidly expanding, particularly in the larger cities including Jakarta (the economic and political centre of Indonesia). By next year, 46 new property projects will add almost 25,000 new apartments in Jakarta (‘strata title’, a term referring to the multi-level apartment blocks and horizontal subdivisions with shared areas), with a combined value of approximately IDR23trillion (almost USD$2billion).

With demand and values on the rise in Jakarta, vertical infrastructure is the most lucrative and efficient strategy to engage in property business. The majority of new apartments currently under construction, target Jakarta’s middle class segment affording to spend approximately IDR200 to 500million (USD$17,000 to 43,000), on an apartment. Analysts claim there are no signs of a property bubble arising in Indonesia. The main argument being that the majority of new apartments (around 70%), is purchased by end-users rather than speculative buyers.

East Indonesia the fastest rising in the country

Bank Indonesia’s (BI) latest survey has revealed that property prices in major Eastern Indonesian cities have indicated an upward trajectory owing to the stronger purchasing power of its citizens and an increase in housing investments.

During the April to June period, the index of residential property prices in Manado of North Sulawesi, experienced the largest quarter-to-quarter rise of 9.5%, followed by Makassar in South Sulawesi, with an increase of 6.5%.

The rise of property prices within the two cities was significantly above the overall average of Indonesian cities. BI’s residential property prices index, including 16 major cities in Indonesia, only increased by 1.7% quarter-to-quarter during the same period.

Property shares gain today

Indonesian stocks grew for a second day today, before of the central bank’s monthly meeting on monetary policy.

The benchmark Jakarta Composite Index (JCI), gained 19.15 points (equivalent to 0.4%), to 5,132.39, expanding Monday’s 1.2% advance. Approximately 6.1billion shares valued at Rp5.5trillion ($466million), altered hands on the Indonesia Stock Exchange (IDX). This is still visibly lower than its year’s daily average turnover of Rp6.2trillion. Gainers were ahead of decliners by 181 to 103. Foreign investors accounted for Rp3.5trillion or 64% of the total trading value. They purchased Rp452.4billion in shares more than they sold.

Bank Indonesia, the Nation’s central bank is scheduled to announce its decision on interest rates this Thursday. Economists assume the central bank will maintain its policy rate at 7.5%. It has kept its rate unchanged since November following a gradual increase by 175 basis points in recent months.

All sectors with the exception of agriculture and miscellaneous, grew on the local bourse. Property shares as group, led sectors, with a 0.9% gain. Lippo Karawaci, one of the major property developers of Indonesia, increased 3% to Rp1,205. Surabaya based, Pakuwon Jati gained 2% to Rp445. Infrastructure stocks gained 0.9%. State-owned toll road operator, Jasa Marga contributed 1.6% to Rp 6,250.

Basic industry increased by 0.7%.The manufacturing unit of state controlled construction company Wijaya Karya, Wijaya Karya Beton gained 1.6% to Rp950.

The rupiah strengthened 0.4% to 11,677 against the US dollar from 11,728 on Monday, according to Bank Indonesia data. The yield on the government’s ten year note fell to 8.3541% from 8.3654%, as seen in data from the Indonesia Bond Pricing Agency.

Property groups focusing on healthcare

With health concerns growing amongst Indonesia’s increasing middle class, property groups are also increasingly looking towards the health care business to boost recurring income.

At present, there are 2,337 hospitals scattered throughout South East Asia’s most populous nation, of which just over 30% are private hospitals, as reported by the latest data from the Health Ministry.

Amongst the privately operated are Siloam International Hospitals, opearted by Lippo Karawaci, one of the major listed property developers in Indonesia.

Lippo Karawaci has risen to be the country’s largest private hospital operator following its investments in health care services starting to pay off.

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. 

Second Marriott Courtyard opens in Bali

Marriott International has established its second Courtyard branded property in Bali.

Marriott Bali Seminyak’s new Courtyard is a 290 room hotel situated in the Seminyak area of the island, nearby the beach.

Described as an ‘urban oasis’, the hotel offers a variety of rooms with private terraces or balconies, as well as a bar and restaurant, a large lagoon-style pool, 24-hour fitness centre, a kids’ club, plus banqueting and conference space for up to 350 people. Free Wi-Fi is also offered and the hotel has shuttle bus services to the beach and close by entertainment areas.

Another novelty feature of the recent property is an electronic board in the lobby, informing guests on hotel facilities, nearby attractions, flight schedules, a local map and general news.

Marriott’s vice president for Indonesia, Australia, Malaysia and Singapore happily explained that Seminyak, Bali is one of the trendiest locations for business as well as leisure travellers.

Marriott Bali Seminyak is the second brand opening in Bali after the Courtyard by Marriott Bali Nusa Dua. It is the 31st Courtyard hotel in Asia.

Developers targeting university students

Numerous property developers have begun to look towards outskirts in proximity to campuses as they target university students for their projects.

The booming middle class of Indonesia has led to more families being able to send their children to respected universities at home.

Favoured universities are concentrated within Java, including the University of Indonesia (UI) in Depok, West Java; the Bogor Institute of Agriculture also in West Java; the University of Gadjah Mada, Yogyakarta, Central Java; the Surabaya Institute of Technology, East Java; the Bandung Institute of Technology; and Padjadjaran University – both situated within Bandung of West Java. 

Many students arrive from throughout the different islands of Indonesia, residing close by their chosen campus.

Previously, boarding homes were popular amongst students, owing to their affordability. But with their parents’ increasing purchasing power, many have turned to seeking apartments.