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. 

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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.

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.

Property News - Majestic Land Developments

The chief of Majestic Land property developer has announced works on a portfolio of new property projects for the upcoming five years, beginning this year.

The projects are worth Rp40trillion ($3.45billion) and will involve the development of residential, commercial and hospital buildings.

Majestic Land are optimistic the property business will maintain good prospects. Which is why they have continued to expand into differing property segments.

One project includes apartment development in Yogyakarta where the company are also aiming to develop a condominium hotel to be titled the Best Western Condotel upon 1,682 square metres of land.

According to Majestic Land, of the 124 fully furnished condotel units still under construction, 89% had already been sold. It is not unusual for property developers to sell units of a project prior to completion of construction, to aid in financing the development. The new property unit owners are to take possession in the next 15 months.

Other Majestic Land projects include a condotel in Bandung, West Java, as well as an office tower in Jakarta, plus a villa development project in Bali. These projects all differ in value, with the major one being the office tower in Jakarta, estimated to cost Rp870billion.

Majestic Land also develop property elsewhere in Asia.

Favehotel to open six more hotels in Indonesia

Archipelago International’s Favehotel brand is to continue to rapidly expand by launching six more properties across four Indonesian cities, namely Jakarta, Cilacap, Padang and Pekanbaru.

The capital, Jakarta will house three of the new Favehotels, commencing with an 84 room Favehotel Zainul Arifin, this coming September. A 110 room Favehotel Pasar Minggu will follow a year later, during the second quarter of 2015, before the final Jakarta Favehotel accommodating 100 rooms, Favehotel Grogol Jakarta, will open during the final quarter of 2016.

Also opening during the final quarter of 2016, will be a 120 room Favehotel Cilacap, Central Java. Sumatra Archipelago is to quarter the Favehotel Olo in Padang and Favehotel Sudirman in Pekanbaru, both during the final quarter of next year.

Therefore, Archipelago International will experience over double its collection of hotels within the country over the next few years. In fact, Archipelago International will be establishing 33 new hotel projects all by the end of this year, as next year is already set to establish a further 37 hotels.

Archipelago describes Favehotel as a ‘select service’ brand, with amenities including free Wi-Fi and flat-screen TVs in all rooms, often featuring cafes and meeting rooms. 

There are an existing 27 Favehotels situated throughout Indonesia and Malaysia, ten of which are within Jakarta and four in Bali. Archipelago also plans to launch the brand in the Philippines during the near future.

DoubleTree Hilton - The latest hotel, hospitality and leisure news

Do you remember when Commercial People updated you with the news of DoubleTree by Hilton Jakarta opening in Diponegoro? They finally opened to guests last week as the first Double Tree in Indonesia.

Situated upon 1,400m² plot of land in Cikini, Central Jakarta - Diponegoro quarters 253 guestrooms including 11 suites and executive rooms. It has three dining outlets, with a ballroom plus meeting rooms, as well as an outdoor swimming pool with a children’s pool, as well as around the clock business and fitness centres.

This DoubleTree marks the addition of a third brand to Hilton Worldwide’s portfolio in Indonesia. The other two being Conrad, Bali and Hilton, Bandung.

Going forward, the group are to establish its Hilton Garden Inn brand in the Bali airport during August/September, plus a second property in Kuta, Bali during 2016. Further in the pipeline is Waldorf Astoria, opening in Jakarta and Uluwatu, Bali during 2017.

The vice president of operations – South East Asia, Hilton Worldwide have claimed that they would love to have each brand in Jakarta. Considering Jakarta’s scale, there could be more than one Hilton Garden Inn.

Within a mature market such as Bali, there has also been demand for hotels such as Hilton and DoubleTree by Hilton and Hilton.

Medan and Balikpapan are also being considered for Hilton or Hilton Garden Inn. Medan is the second largest city of Indonesia with a combination of leisure and business markets, as Balikpapan quarters gas and oil businesses.

Latest property market news - Lippo group

On Wednesday, Lippo Group broke ground with a mixed-use shopping mall in Kupang, East Nusa Tenggara, in its latest endeavour to develop beyond Java.

The director revealed Lippo Mall Kupang will be built across four hectares, costing approximately Rp600billion ($51million).

The 40,000 square metre shopping mall will quarter Matahari Department Store, Hypermart, as well as the Lippo Group’s movie theater chain, Cinemaxx.

The Kupang mall is amongst the Lippo Group’s major plan to tap into the property market of East Nusa Tenggara.

The group is currently also building a branch of its private hospital chain - Siloam Hospitals – nearby the Lippo Mall Kupang, expected to open in October. It will cover an area of approximately two hectares with 320 rooms alongside 250 catering for patients.

Furthermore, the Jakarta based group will also construct a Lippo Group office, upon an area of approximately two hectares, on the site.

Last year, Lippo inducted the Kupang branch of its hypermarket chain, Hypermart, through Matahari Putra Prima — its lifestyle retail unit.

Beyond Kupang, the property conglomerate is also presently undertaking several projects within areas outside Java - Including Makassar, Padang, South Sulawesi and West Sumatra.

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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

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.

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.

Jakarta leading property investment destination

Major development within the property sector of Jakarta during recent years has led to the capital city being acknowledged as one of the leading property investment destinations in the world.

Jakarta was recently titled the hottest spot for prime real estate in the world, for a second consecutive year, reported by Knight Frank property consultant.

The Global Cities Prime International Residential Index (PIRI) report, tracked the luxurious property markets of 30 cities around the world.

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.

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.

Jakarta is Indonesia's Number 1 Emerging City!

According to the latest from Chicago’s Emerging Cities Outlook (ECO) Index, Jakarta is now the number one rising city. The report looks at cities from low to middle income countries with a strong likelihood to progress over the next two decades, measuring from the business activity criteria, human capital performance and innovation indicators attracting business and talent.

Indonesia generally has been gradually more recognised by companies and their counterparts in foreign governments, as a growing influence in both global and regional business – as stated by a representative of AT Kearney. They continued onto explaining that Jakarta also has a significant demographic advantage alongside capital stability, security, environment and awareness contributing to the city becoming number one.

Jakarta is followed by Manila, the Philippines’ major financial, commercial and cultural hub, ranking second owing to its key advancement in human capital indicators, particularly in the availability and quality of healthcare. Kuala Lumpur, Malaysia was also in the top ten, based upon largely improved transparency and business activity and transparency. The ECO also reported the potential and probability of an emerging city to rise up and into the more prestigious Global Cities Index (GCI).

Beijing, China, stands out in making it on both the top tiers of the GCI and ECO Index, ranking 8^th and 12^th respectively. The city’s improved healthcare, increased business activity from Fortune 500 companies and performing engagement in politics, as well as its growing international education provisions and escalating IT sector, allowed it to climb six places from 2012.

Doubletree Hilton opens in Jakarta

Hilton has finally opened a Doubletree hotel in Indonesia, which could only mean it must be the right to invest in hotels and leisure!

Diponegoro offers 253 rooms as well as seven events and meeting rooms, catering for up to 800 people. This is as well as a 24 hour business and fitness centres, all in the core of Indonesia, Jakarta.  

Latest Jakarta news brought to you by Commercial People

 

Great news in Jakarta, the city has been labelled as the ‘hottest luxury property market in the world’ for a second consecutive year, as reported by renowned property consultant, Knight Frank. Jakarta’s market was labelled the hottest out of 30 cities in the world, based upon having the highest increase in prices for real estate – an increase of 38% during the year 2013. This increase was almost exactly similar to the increase during 2012.

More great news for Indonesia, Bali followed not far behind as the third hottest luxury property market in the world, with a 22% gain - Perfect timing for the exciting developments under construction, within the city.

 

Thinking of investing in property? It is evident that Indonesia is the best place to start, so check out www.commercialpeople.co.id - Coming soon.