Property Sector Indonesia: Bleak Demand for Apartments in Q1-2016
Property market research firm Colliers International Indonesia said Indonesia's residential apartment sector remained weak in the first quarter of 2016. The sector is still feeling the impact of the slowdown in the overall property sector of Indonesia that occurred over the past two years. Ferry Salanto, Associate Director for Research at Colliers International Indonesia, said only three new apartment projects were launched in Jakarta in Q1-2016: (1) The Residence at The St Regis Jakarta, (2) Arandra Residence and (3) the Victoria Tower Fatmawati City Center (these projects are expected to be completed by 2019 or 2020).
Colliers International Indonesia also revised down its forecast for new apartment unit supplies in Indonesia in the 2016-2019 period due to the overall slowdown of the property sector, the delay of several projects and the failure of some developers to obtain construction permits. The research firm expects that the total new apartment supply in Indonesia will reach 75,083 units in the 2016-2018 period, down 3.2 percent from its earlier forecast.
One of Indonesia's property developers that expressed its concern about current conditions in the nation's property sector is Intiland Development. The company's management said it will refrain from launching new projects on the short-term, instead choosing to focus on its existing projects. Intiland Development primarily develops apartments in the two biggest cities of Indonesia: Jakarta and Surabaya.
The apartment supply in the 2016-2018 period in Indonesia will still be dominated by strata title apartments in the capital city of Jakarta (‘strata title’ refers to the multi-level apartment blocks and horizontal subdivisions with shared areas). Meanwhile, Colliers International Indonesia stated that the occupancy rate for apartments in Indonesia fell 1.7 percent (q/q) or 3 percent (y/y) in the first quarter of 2016.
Colliers International Indonesia is part of Colliers International, the world's third largest commercial real estate company.
Luke Rowe, Technical Advisor at Jones Lang LaSalle Indonesia, added that Indonesia's demand for condominiums has weakened since the last quarter of 2015. Particularly condominium demand from the wealthier segments of Indonesian society declined amid curtailed buyer confidence. On the contrary, condominium demand from Indonesia's middle class segment remained solid as affordability is greater and the tax burden is lower.
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