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.

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.

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. 

Developer reports profit increase, thanks to growing demand for homes

Modernland Realty property developer has reported a substantial 21% increase in profit during the first quarter of this year, owing to a growing demand for homes.

The property developer company’s net income for the first three months of this year was Rp390.2billion ($33.6million), comparable with Rp323billion during the same period last year, as its revenue rose 34% to Rp790billion.

The Tangerang based property developer, Modernland’s portfolio includes a golf course in Tangerang, townships, as well as residential developments within and surrounding Jakarta, plus in Sukabumi, West Java. The company also owns an industrial estate in Serang, Banten.

Modernland’s property sales rose by 34% to Rp761billion during the first quarter, accounting for over 95% of the total revenue of the company.

Revenue from rental fees accumulated to Rp15.6billion, up 49% from the same period last year. The company’s club houses and golf course generated Rp12.5billion, growing almost 50%.

The company has allotted Rp1.3trillion for capital outflow this year, utilised mainly to purchase approximately 1,000 hectares of Jakarta land.

A representative from Modernland, previously announced plans to set aside 400 hectares for an industrial estate with the remainder for other East Jakartan developments.

Modernland has been developing its portfolio in East Jakarta since last year, when the company paid Rp2.29trillion for a 51% stake in Mitra Sindo Makmur (MSM) and Mitra Sindo Sukses (MSS). They jointly hold a 51% stake in Jakarta Garden City, a 270hectare commercial and residential project in Cakung, East Jakarta. Modernland formerly held a 51% in the project.

Modernland also wrapped a deal with a local branch of Japanese retail developer, AEON Mall Indonesia, purchasing 8.5hectares of commercial land in Jakarta Garden City for $45.67million.

As reported by Cuncun, the company expects marketing sales of properties still under construction, to hit Rp4trillion this year, in comparison to the estimated Rp2.7trillion last year.

'Indonesia's market has the highest potential of the Asia Pacific'

Sony Mobile Communications has claimed Indonesia’s market has the highest potential of the Asia Pacific, as the country’s middle class continues to rise. Indonesia was said to be a significant for Sony, owing to its growing population. As the middle class and population increases, so does the demand for smart phones. Sony aims to take this opportunity to grow its sales within Indonesia, using heavy investment only within Indonesia throughout the Asia Pacific.

A GFK study ranked Sony as second in the mobile phone market by value. Sony had received orders for over 1,200 Z2 phones since it was launched in early March this year.

Property investment volume increase in Asia Pacific

This year, Cushman and Wakefield assume that the Asia Pacific’s markets will continue to strive, parallel to the rising worldwide economy and growing domestic demand.

The gradual rise in property investment within the Asia Pacific supports the assumption – Cushman and Wakefield predict a 7 to 8% increase in the activity.

The Asia Pacific region saw an increase in investment within all areas of the Asia Pacific in 2013, with a 25% increase delivering a volume of US$568.6billion at the end of the year, equivalent to 48% of the global market.

Cushman and Wakefield concluded that rises would continue for at least two years as economic growth results in growing demand within the property industry, which in turn pushes rent higher.