Indonesia property sector set for further growth

Indonesian property businesses, particularly in Jakarta, are viewing favourable conditions allowing for further growth next year.

However, it must be noted that the magnitude of the sector’s growth next year will not be great as that in the recent three years. Analysts agreed that significant growth would be seen, according to Amran Nukman, the Jakartan branch chairman of the Indonesian Real Estate Association (REI).

Chairman Nukman explained property businesses will continue to gradually grow next year. During 2012 we saw the sector rise from 40 to 60%. Next year, 10 to 20% growth is expected. This growth is considerably good with next year’s likely favourable economic conditions.

The optimism that the sector is to develop next year, takes into consideration the Jakarta administration’s support on property businesses in the city. 

The rise of Basuki ‘Ahok’ Tjahaja Purnama as the city’s acting governor is pleasing to many property developers, perceiving him as business-friendly. This is as he has been described as very businessman-like, delivering positive impacts to the property sector. This is much suited to developers in a convenient way. Ahok and his team are currently concentrating upon developing Jakarta’s infrastructure.

Many of the city’s infrastructure projects, such as the addition of new Transjakarta routes and buses are beneficial to Jakarta’s developers, as it is assumed to motivate property sector growth in 2015. New legal products may be very useful for Jakarta’s spatial planning over the upcoming years to come.

A recent study by Cushman and Wakefield property consultant has indicated the REI has good reason to be optimistic towards growth in Jakarta’s property firms. 

This was as it was reported that sales from 30 residential estate projects within Greater Jakarta during the first semester amounted to Rp8.3trillion (US$652 million). The average number of sold houses reached 100 units in each residential estate per month.

Paramount and Summarecon Serpong and Jakarta developers contributed the most to overall sales figures within Greater Jakarta, followed by Bogor, Depok and Bekasi.

Furthermore, the study also reported that the majority of houses were bought by the upper socioeconomic bracket, equating to 30% of total transactions—a slightly higher percentage than the middle-income bracket, accounting for 29% of sales. 

According to the Cushman and Wakefield senior associate director, who is also the head of research and advisory, Arief Rahardjo, the prices of the most sought-after houses were between Rp2.3billion and Rp4.8billion, at 195 to 269 square metres, with land crossing 220 to 300 square metres. 

The middle-income bracket also accounted for 24% of sales, who purchased houses ranging from Rp876million to Rp1.2billion, at 47 to 90 square metres, with land crossing 62 to 105 square metres.

Finally, homes sold to the lower-income bracket accounted for 28.48% of sales. This demographic typically sought houses with prices ranging from Rp161million and Rp380million, at 33 to 34 square metres, on land crossing 78 to 90 square metres.

Furthermore, according to Rahardjo, the central bank’s latest policies on interest rates and down payments are actually beneficial to developers in the in terms of aiding real estate agents sellers carefully selecting clients. Owing to the rules, now end buyers make a proportion of the majority of home buyers in Indonesia.