Property analyst Torushon Simanungkalit and Managing Director of Synthesis Residence Kemang Mandrowo Sapto are both positive about ongoing demand for residential property in Jakarta, particularly demand for apartments. Simanungkalit explained that apartments in Jakarta's prime locations (for example the central business district located in the heart of Jakarta and the area around Jalan Simatupang in South Jakarta) are generally a solid investment object for buyers. Most of the apartments in these areas (specifically the newer ones) are expensive and quite luxurious. Those who live here include bankers, diplomats, artists and businessmen. Many of these apartments are not used by the end-buyer but rented out to others who have their offices located nearby the property. Those apartments located outside the prime locations are usually occupied by the end-buyer.

Meanwhile, Sapto says investment in vertical property in Jakarta remains attractive despite the recent slowdown of the Indonesian economy because the capital gain (profit that results from a sale of a capital asset) continues to grow strongly each year. A key factor why prices of apartments are rising continuously is the government's aggressive push for infrastructure development in Jakarta. Central and local authorities are eager to improve connectivity in the capital city. Examples of these projects are the Mass Rapid Transit (MRT) project that will be able to transport about 450,000 passengers per day and railways from Jakarta to the city of Bandung and the Soekarno-Hatta International airport. Sapto added that the price of an apartment in South Jakarta can increase by 50 percent after purchased by the end-used or investor within a couple of years. However, this gain is much lower than the 100 percent price increase that was not uncommon during the years 2012-2015.

For part of the urban community, living in an apartment has become part of a life style. There are indeed several advantages that make living in an apartment an attractive alternative. There is continuous security monitoring, facilities such as a pool or gym (many apartment blocks have kindergartens on the lower level) and there usually is a taxi stand next to the block. Choosing an apartment close to your office also means you will not have to experience hours-long traffic congestion. The aforementioned facilities and services do make this "life style" more expensive.

Further Reading: Analysis & Overview of Indonesia's Residential Property Industry

Colliers International Indonesia expects 54 apartment projects to be developed in Jakarta in 2016. Most - nearly 95 percent - of these projects are located outside the traditional business centers of the capital city. The majority is intended for the middle and upper middle class.

Amran Nukman, Chairman of Real Estat Indonesia (REI), said demand for apartments has spread to other urban centers located close to Jakarta, such as Bogor, Depok, Tangerang and Bekasi. Nukman states that demand for vertical residential property remains high in these locations this year as he detects a shift from local demand for landed houses to apartments. As usual due to limited availability of land in these urban centers, vertical infrastructure is a good solution but also implies that prices rise sharply.

Importance of the Tax Amnesty Bill for Indonesia's Property Industry

In its latest report about Indonesia's property industry, Standard & Poor's Financial Services writes that the outlook for the nation's property sector depends on the passing of the tax amnesty bill. This bill, proposed by the Indonesian government, gives attractive tax incentives to those tax evaders that have been storing their (unreported) wealth abroad. Earlier, Indonesia's Finance Ministry estimated that this tax amnesty bill would bring in additional tax revenue worth around USD $4.4 billion in 2016. Moreover, analysts believe that wealth that is transferred from abroad to Indonesian bank accounts will find its way to the local property market as the (former) tax evader does not have to worry local authorities will confiscate the property. It remains unknown when - and if - the tax amnesty bill will be passed in parliament (talks have been postponed on request of the parliament until April 2016).

S&P further says property sales in Indonesia cooled in 2015 amid slowing economic growth, weaker consumer income as well as weaker consumer confidence. In the first two months of 2016 marketing sales among domestic property companies have remained in slowdown-mode. Xavier Jean, Standard & Poor's Corporate Credit Analyst, says any sales pick-up would occur in the third quarter of the year provided the tax amnesty bill is passed in May. Would the bill fail to be passed he expects to see further slowing marketing sales, hence undermining the financial performance of Indonesian property companies.