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 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.

Foreign developers keen on Indonesia's property market

A number of foreign developers have laid eyes on Indonesia’s property market owing to the country’s massive population and economic growth of 5.5% - the highest of South East Asia.

It has been reported, investors from China, Korea, Malaysia and Singapore have expressed interests in extending property businesses to Indonesia. The property project types they are interested in, vary from residential projects including apartments to commercial projects, such as shopping centres and industrial estates.

For example, the Singaporean based Pacific Star Holdings Pte Ltd., intends to manage one property project in the Sudirman Central Business District (SCBD) in Jakarta and another one in Bali.

This is as they cited data from the United States Trade Department, highlighting that Indonesia quarters the world’s fourth-most populous country with 253.60million people, as the reason for investing towards the country’s property sector. It selected Jakarta as the project site, owing to the city’s profitable nature for property development.

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.

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.

Sinarmas unit Bumi Serpong to enter Indonesian toll road business

Indonesian property developer PT Bumi Serpong Damai, a unit of Singapore-listed Sinarmas Land Ltd, has set up a joint venture to build toll roads which could boost the prices of its surrounding projects.

The company aims to work with Kompas Gramedia Group and PT Astratel Nusantara to develop the 36-kilometre Serpong-Balaraja toll road on the outskirts of Jakarta, Bumi Serpong Director Hermawan Wijaya told reporters on Monday.