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. 

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.

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. 

Telkom property project

Perusahaan Perseroan PT Telekomunikasi Indonesia Tbk (Telkom), Indonesia's major telecom firm has plans to spend up to Rp1.1trillion ($95.49 million), or around 5% of its total capital expenditure towards a property project. This is according to Finance Director, Honesti Basyir.

Through the firm’s PT Graha Sarana Duta unit, plans are to utilise its 2million square metres of unproductive land for commercial property use.

Earlier the firm announced plans to develop 19 hotels, retail property plus other multifunction property projects over the upcoming five years.

Fashion meets property development

During a recent interview with the Bangkok Post, Tom Light of FashionTV has revealed company plans to place seal on hotels, following success of restaurants and cafes throughout Asia.

Asia is currently one of the most fashion conscious hotspots in the world, with fashion being so much more than clothing and accessories – it is a part of lifestyle choices, from where is a trendy location to eat and even where to stay overnight during travels. Asian cable channel, FashionTV has grown over the last 15 years to become a worldwide marvel, up to date with the very latest in fashion. It has extended its reach in delivering its approval seal (plus distancing Diamond F logo), to clubs and cafes across Asia. The next phase in the plan is to develop a range of hotels for the trendiest people to stay in the most elegant of locations.

The new property developments are to extend beyond Asia to Dubai and India and is to feature residential towers alongside the hotels. Plans are to deliver the same approach towards fashion to the property design, to be circulated across some of the world’s hottest locations.

The plan is comprehensive and ambitious, with 35 projects already scheduled to be launched before the end of 2020. Bangkok Interior Design Studio Marques and Jordy have a diamond inspired design construction for the F Hotel Dubai, finishing with lavish facilities.

The vice-president of business development, Tom Light, explained of being in discussions for expansion within regions, particularly Indonesia, China, Singapore and Thailand. There are a number of club and cafe locations in Bangkok, Shanghai, Shenzhen, Singapore and Tokyo, plus the process of opening in Guangzhou, Pattaya and more. This is just one indication of FashionTV’s popularity in Asia, tuned to over 200million TV viewers, giving confidence to expand into the region’s best hotels.

Condominium numbers increasing

Worldwide real estate services firm, Jones Lang LaSalle expects Indonesian condominium sales to see a record-breaking figure this year, signalled by Jakarta’s current trend, where people remain to shift to living in apartments rather than detached or attached single-unit houses. Jones Lang LaSalle’s head of research, have announced both developers and buyers have shown growing interest towards developing and purchasing property.

The real estate firm’s report reveals that Indonesian developers established approximately 4,000 new condominium units between April and June this year (such as West Jakarta’s St. Moritz, developed by Lippo Group, plus Central Jakarta’s Raffles Residence, developed by the Ciputra Group). Furthermore, more than 7,400 units have been sold during the recent six months.

Industry investment opportunities from Asian Urbanisation

Industry players of a banking forum today, claimed they see massive business opportunities from Asian urbanisation. This is with a researcher having emphasised aspects including agriculture, consumer products and infrastructure.

The infrastructure sector of the region on its own calls for 2.4 trillion U.S. dollars of investments from now to as far as 2030, as claimed by a senior representative of the McKinsey Global Institute during the DBS Asian Insights Conference. The agricultural sector is also anticipated to consolidate, generating major business opportunities.

MNC Land - $3billion entertainment centre expansion

MNC Land plans to spend up to $3billion on expanding its integrated Sukabumi, West Javan integrated entertainment centre. The MNC land being the property development unit of Indonesian conglomerate MNC Investama.

Groundbreaking will begin during August, with villas, hotels, theme parks, alongside a variety of other supporting infrastructure for a recreational area.

MNC is also presently seeking a partner in developing the project, due to the magnitude of the project.

Included will be Lido Lake Resort and Golf, to cover approximately 2,000hectares and estimated to be fully completed within 20 to 30 years.

Indonesia's first floating airport!

Central Java’s Ahmad Yani International Airport in Semarang, is to become Indonesia’s first “floating” airport. This is as the latest expansion project includes a new passenger terminal to be built on a platform on water.

The president director of state run airport operator, PT Angkasa Pura I, managing airports in the Eastern part of Indonesia — announced that the expansion would allow the airport to host up to six to seven million passengers each year, up from 3.2million from the end of last year.

New residential project in Papua

A subsidiary of property giant Ciputra Development, Ciputra Surya will begin construction on a new residential project by the end of this year in Jayapura, marking the company’s venture into Papua Island.

The project will compose approximately 38hectares of landed residence, as reported by the director of Ciputra Surya.

The listed property developer is presently undergoing preparations for construction, having already assessed the potential of Jayapura from flight frequencies to purchasing power.

Metland developing three new commercial and residential projects this year

Beautiful Botanical Gardens in Bogor, near where the first mall of Cileungsi will be built

Property developer, Metland (officially Metropolitan Land), are to commence construction of three new commercial and residential projects throughout Indonesia this year.

Announced at the company’s press release, one of the projects prepared is to be a commercial and apartment complex within West Jakarta, marketed as Metland West City. It is due to launch by the end of 2014. Following the company’s yearly shareholder’s meeting in the Jakarta capital on Monday, the investment value of Metland West City is still to be determined.

Metland West City will be developed across 60hectares, with around half to be allotted to commercial development.

Louvre - Another group to open multiple hotels in Indonesia

The tenth largest hotel group in the world and the second largest of Europe, the Louvre Hotels Group, has publicised expansion plans for Indonesia, announcing up to 30 new hotels within the upcoming three years under the Première Classe and Golden Tulip brands.

The announcement marks a further obligation to the destination following Golden Tulip’s access into the market during late 2012.

Since then it has established the Golden Tulip Galaxy Banjarmasin offering 138 rooms. There are six more hotels totalling an additional 1,286 rooms, planned to open this year:

1. Golden Tulip Devins, Bali - scheduled for a June opening, offering 108 rooms in trendy lifestyle region of Seminyak

2. Golden Tulip Essential - August opening, offering 94 rooms in the Denpasar business district region

3. Golden Tulip Jineng Tamansari, Kuta, Bali - October opening, offering 185 rooms on Sunset Road

4. Golden Tulip Essential - November opening, offering 186 rooms in the Pontianak business region

5. Golden Tulip Kalyana, Buah Batu, Bandung - December opening, offering 302 rooms with easy access to industrial and business regions

6. Royal Tulip Bandung, Baros, Cimahi - December opening, offering 411 rooms with easy access to Jakarta, situated just across the exit of the toll road. This will be the flagship of the Indonesian group, being the largest hotel of the group, as well as the first Bandung hotel quartering the major convention centre of the town alongside a wedding chapel

The latest developments in Indonesia

Property developer, The Blacksteel Group, has announced plans to construct projects worth $300million in various Indonesian cities until 2018. The Lippo Group stated the company will concentrate on developing property within remote areas.

One project is the development of Lombok City Center (LCC), a mall in Mataram, the capital of the island. Funds of the project are from a variety of sources combined from money from investor’s, internal cash and bank loans and money from investors. The LCC is expected to be completed by 2016 with investment for the project estimated at approximately Rp1trillion ($86million). The Lippo group claim LCC will boost the image of West Nusa Tenggara to transform to a modern province providing bright investment prospects.

Furthermore, LCC is assumed to open employment opportunities in the region, aid in propelling consumer purchasing power and boost the regional economy. Representatives from Lippo have also claimed Blacksteel intends to develop property projects in areas that big developers have not yet engaged with; concentrating on second and third tier Indonesian cities. This is with Blacksteel plans to construct 17 malls over the next five years.

Higher wages together with steady economic growth over recent years has given greater purchasing power to consumers of Indonesia’s Eastern provinces.

The company is currently developing the Ambon City Center (Maluku province) and Ponorogo City Center (East Java) malls.

Blacksteel is independent of the Lippo Group.

Indonesia hotspot for hotels - Hilton opening several hotels throughout the country!

 

Jakarta’s booming economy associated with an active domestic travel market, has made Indonesia a hotspot for hotels. The Indonesian Hotels and Restaurants Association’s latest data forecasts that there will be 50,000 new supplies, raising classified rooms available in the country to over 200,000 by the end of this year, compared to 171,000 at the end of last year. If non-classified hotels are taken into account, the total of supplied rooms during 2013 stands at 431,000.

West and South Jakarta promising for high rise building development

 

Leading global commercial real estate firm, Colliers International, has expectations for South and West Jakarta to become high potential regions for the development of high rise buildings including offices. The firm explained that the capital’s infrastructure development plans, particularly new road construction, are the major reason as to why prospects of property development have become more promising within T.B. Simatupang (South Jakarta) and Kebon Jeruk (West Jakarta).

The Jakarta Outer Ring Road, which will link Kebon Jeruk (West Jakarta) and Ulujami (South Jakarta), is expected to aid businessmen in efficient travel. State-owned toll road operator, Jasa Marga, aim for the 7.67km road to be ready for operation by the end of June 2014.

T.B. Simatupang, known as the new Thamrin (the central street of Jakarta's Central Business District), is strategic in location owing to its proximity to the toll road (with direct links to seaports, airports and the Tangerang and Bekasi industrial estates, both situated just outside Jakarta).

Colliers International’s data suggest that base rental rates for offices within T.B. Simatupang will increase to USD $20 per square metre, each month, with purchasing prices starting at IDR30million (USD$2,608), per square metre.

Indonesia central to ASEAN - High potential for international trade

The three day World Economic Forum (WEF) on East Asia 2014 commenced in Manila yesterday, receiving over 600 leaders, entrepreneurs and thinkers together.

Issues will be discussed, including the optimal way to compose the 10 member Association of South East Asian Nations for the ASEAN Economic Community planned for next year, which is to allow freer flows of capital and lower trade barriers.

Collectively, the ASEAN member states structure one of the largest economies of Asia, with gross domestic product (GDP) at approximately $2trillion and a population of over 600million people.

Indonesia, the largest economy of South East Asia, may benefit from freer trade under the AEC. Its automotive sector rival’s Thailand’s, as it assembles and ships vehicles locally and internationally. Japanese vehicle producers have recently been raising their investments in Indonesia, acknowledging the demand for cars, motorcycles and trucks remains strong. The nation’s youth population, alongside low labour costs makes it an appealing investment location for overseas companies including the Foxconn Technology Group, who produce the iPhones and iPads for Apple.

Environmentally friendly Jakarta

Environmentally friendly Jakarta – Car free day.

Zero Energy Architecture is on its way to becoming the next hot trend in the sustainable energy market. It aims to design zero carbon design buildings that generate the same amount of energy used throughout the year.

These green buildings utilise a number of features to maintain the net zero energy consumption, such as solar panels, tinted windows absorbing only light and no heat, geothermal energy, as well as others, varying across different building designs.

Two new Ritz-Carlton getaways to open and attract business in Indonesia

The Ritz-Carlton Hotel Company is set to establish 15 new hotels by 2016, expanding its global footprint to 100 resorts and hotels. With upcoming openings ranging from a trendy city property in Cairo, to a seafront resort in Bali, the pipeline of new accommodations offers to travelers within both emerging and established destinations.

Jakarta Skyscraper to Draw Energy from Wind

The new headquarters for the Indonesian state-owned energy company will be the tallest tower in Indonesia, if complete, with designs to harness energy from the wind. 

The Pertamina Energy Tower is expected to reach a height of 530 meters in Jakarta, almost doubling Indonesia's tallest tower, the 269-meter-tall Cemindo Tower, also located in Jakarta.