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. 

Presidential candidates to improve Indonesia transport

Both Prabowo Subianto and Joko Widodo of the Indonesian presidential election have pledged to spend big on transport links including roads, railways and ports – Benefiting retailers who struggle to reach customers within remote regions of the island nation. Whilst consumer companies within the fourth most populous country of the world, trailed builders as the benchmark stock index elevated by 18% this year, the Indonesia Food and Beverage Producers Association claim sales could be as much as 50% higher, if only access to rural areas were improved.

Aberdeen Asset Management, which oversees approximately $541billion, view consumer companies in Indonesia as a way of indirectly playing the infrastructure. This is as they claim any pro-infrastructure policy would make the economy more competitive, benefiting consumers.

London based research firm, Kantar Worldpanel forecasts Indonesia to gain 80 million new consumers over the upcoming 15 years. This is as Indonesia’s economy is forecasted to grow by 5.7% each year through 2016.

The public sector and small and medium sized enterprises are the largest and most robust markets

US based ICT company, Hewlett-Packard (HP) is targeting customers from small and medium sized enterprises (SMEs), together with the public sector in Indonesia, as these market segments are said to be the nation’s most robust.

Jim Merritt, the senior vice president of HP and general manager of Enterprise Group for Asia-Pacific and Japan explained the company regards developing markets such as Indonesia as an engine of growth.

It was claimed Indonesian SMEs were the largest private sector market for HP products, following commercial retail accounts and global companies. By size alone, the SMEs are rapidly growing.

According to Indonesia’s Cooperatives and SMEs Ministry data, the SMEs compose almost 90% of all Indonesian businesses. 97.2% of domestic employment is also provided, generating 57.9% to the country’s gross domestic product (GDP).

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.

Commercial Property stocks have gained highest profit this year

The Indonesia Stock Exchange have revealed that investors who concentrated on property, infrastructure and banking stocks have gained the highest profit so far this year, standing out as Indonesia’s top performers. All sectoral indices contained within the benchmark stock index of Indonesia, referred to as the Jakarta Composite Index (IHSG) have also shown good performance. Indonesia's IHSG has grown by 16.14% during 1^st January to 26^th May, this year.

The property sectoral index of Indonesia grew by 28.15% between 1^st January and 26^th May, followed by the financial (up 23.62%) and infrastructure (up 17.99%) sectors. With the exception of healthy general economic growth, the property and infrastructure sectors gained a boost from the political agendas of two presidential candidates – Prabowo Subianto and Joko "Jokowi" Widodo. Both candidates target accelerated infrastructure growth, with improved quantity and quality of infrastructure, whereby investments in real estate and property become more attractive.