The government of Indonesia may succesfully curb the nation's housing backlog figure to 6.8 million units by 2019. Providing adequate housing for the poorer segments of Indonesian society is one of the key tasks of the Indonesian government (for example through its 'one million houses' [per year] program). In 2015 Indonesia's housing backlog declined by 16 percent (y/y) to 11.4 million units according to the data from Indonesia's Statistics Agency (BPS). With enough effort of the government and private sector the figure should continue to drop in the foreseeable future.

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Although the government of Indonesia recently decided to allow foreigners to buy landed houses and apartments in Indonesia (while setting a minimum value on property that foreigners are allowed to purchase), there are yet to surface reports of expats buying Indonesian property. There are several matters that can explain foreigners' lack of enthusiasm to invest in property in Indonesia. Indonesian property association Real Estate Indonesia (REI) has several proposals to make it more attractive for expats to buy real estate in Indonesia.

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By relaxing the loan-to-value (LTV) ratio, the central bank of Indonesia (Bank Indonesia) expects to see House Ownership Credit (Kredit Pemilikan Rumah, abbreviated KPR) growth to accelerate by an additional 5 percent. Up to April 2016, KPR growth was recorded at 7.61 percent (y/y) only, down significantly from the years 2012-2013 when - amid the glory years of property development in Indonesia - KPR growth touched figures of between 30 - 49 percent (y/y). Back then concerns emerged whether Indonesia was about to experience a price bubble in the property sector.

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The government of Indonesia will soon unveil a new economic policy package, the 13th in the series of packages that have been released since September 2015 with as overall aim to boost Indonesia's economic growth. Indonesian Chief Economics Minister Darmin Nasution said the 13th edition, which is currently being discussed among government officials, will focus on residential property for low income families. However, he refrained from providing more details at this stage.

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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).

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Despite the slowdown that occurred in Indonesia's property sector amid the overall cooling economy, at least 54 apartment projects are currently being developed in the capital city of Jakarta in 2016, nearly all of these projects are situated outside the city's central business district. Investment in apartments remains attractive for both the developer and end-user (or investor), various property watchers say. Meanwhile, global rating agency Standard & Poor's Financial Services says the outlook for Indonesian property developers this year depends on the passing of the tax amnesty bill.

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Indonesia's banking sector expects that House Ownership Credit (Kredit Pemilikan Rumah, abbreviated KPR) will grow strongly in 2016 as Indonesian people's purchasing power and consumer confidence is estimated to improve amid accelerated economic growth. The majority of home buyers in Indonesia use KPR from a financial institution to finance the purchase of a house. However, interest rates on KPR are high and therefore a burden for many property buyers (although the government provides subsidy for the low-income group that uses KPR to finance a first-time property purchase).

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Stakeholders in Indonesia's property sector may regret to learn that Indonesia's House of Representatives (DPR) decided to postpone deliberations on the tax amnesty bill until (at least) April 2016. This tax amnesty bill, originally planned to be implemented in early 2016, offers attractive tax rates to those tax evaders who declare untaxed wealth and repatriate their funds to Indonesia. If implemented in early 2016, then the bill was estimated to generate up to USD $4.4 billion in additional tax revenue in 2016. Meanwhile, part of repatriated funds would find their way into the nation's property sector.

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The latest survey of Indonesia's central bank (Bank Indonesia) shows that price growth and sales growth in Indonesia's residential property sector continued to slow in the fourth quarter of 2015. The Q4-2015 residential property price index rose by a mere 0.73 percent (quarter-to-quarter) from a growth pace of 0.99 percent (q/q) in the preceding quarter. Indonesian property developers expect that this slowdown will continue at least throughout the first half of 2016.

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Indonesia-based property developer HK Realtindo, subsidiary of state-owned firm Hutama Karya, plans to release a 30 percent stake through an initial public offering (IPO) on the Indonesia Stock Exchange in the fourth quarter of 2016. Funds generated through the IPO will be used for further business expansion. The company eyes 30 new projects in 2016, including the Trans Sumatra toll road. The company also plans to issue IDR 500 billion (approx. USD $36 million) in bonds and IDR 250 billion in medium term notes.

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Over the past two months or so, there has been some more-than-usual reporting in Indonesian media on whether the property market of Indonesia can become a future market for foreigner buyers. It specifically involves residential property in popular places like Bali, Batam, and Jakarta. Moreover, when foreigners can buy property, it may also attract more foreign investment in Indonesia’s property sector.

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Just like most other sectors (with the notable exceptions of the digital economy and telecommunications sector) the property sector of Indonesia was heavily affected by the COVID-19 crisis in 2020-2021. Now this crisis has passed, it is interesting to take a look at the state of Indonesia’s property sector.

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Those who have business interests in Panama and seek their dream house in the beautiful hills of this Central American country, or those who search an interesting investment object in Panama's property sector, now have a great opportunity at their disposal. One of the most beautiful luxury villas in Panama is now for sale. Insiders in Panama's property market call this "a unique object".

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Ciputra Development, one of Indonesia's leading property companies with 75 projects spread across 33 cities, is increasingly focused on diversifying its portfolio outside the island of Java. The company has expanded to Sumatra, Kalimantan and Sulawesi as it wants to "bet on more than one horse" to improve its corporate earnings.

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So far East Jakarta has been left behind in terms of property development in the capital city of Indonesia. For many decades Central and South Jakarta have seen the construction of many residential property and office tower projects. Recently, West Jakarta experienced a major surge in property development. Few investors, however, dared to develop projects in East Jakarta as demand from the (upper) middle class and elite for property or offices in East Jakarta has been low.

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The tax amnesty program of Indonesia is yet to have an impact on Indonesia's property sector. Earlier, analysts and stakeholders expected part of the asset repatriations into Indonesia (under the government's tax amnesty program) to flow to property, either property ownership or property development projects. Although tax declarations and additional government revenue under the amnesty program were a success, the repatriation of assets that were stashed overseas has been weak. However, some stakeholders are optimistic that repatriated funds will flow to Indonesia's residential property in Q2-2017.

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When walking around the Taman Anggrek Mall and Central Park Mall in West Jakarta, you will see several big property projects being built: a new mall (Neo Soho Mall), apartment complexes (Neo Soho Apartments and Taman Anggrek Residences) and a new office tower (Soho Capital). In terms of property development in Indonesia, West Jakarta now seems developers' favorite location. Hari Raharta, Secretary-General of the Indonesian Real Estate Developers Association (REI), informed, however, West Jakarta has seen solid property development since the opening of the Jakarta-Tangerang toll road back in 1984.

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Alam Sutera Realty, an Indonesia-based real estate development company, is plagued by overall declining growth in Indonesia's property sector. In the first half of 2016 Alam Sutera recorded IDR 966.5 billion (approx. USD $74 million) in pre-sales, only 19.3 percent of the company's full-year target. What are the strategies of this company to combat the slowdown?

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Indonesian real estate developer Bumi Serpong Damai, part of the Sinar Mas Group, has ample room for expansion. According to its latest quarterly financial report, the company owns 3,954.88 hectares of land that has not been developed yet, 70 percent of which is located near BSD City, an ambitious urban planning scheme that combines housing, business and commercial properties not far from Indonesia's capital city of Jakarta. The company also has land banks in Jakarta, Bogor, Surabaya, Palembang, Balikpapan and Samarinda.

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Indonesia opened the property market to those foreigners who reside (legally) in Indonesia. However, it also set tough requirements regarding foreign ownership of Indonesian property. Moreover, it remains nearly impossible for expats to obtain a local mortgage to finance the purchase of property. Although local credit may actually not be attractive for foreigners as interest rates are high in Indonesia, it is interesting to take a closer look at why Indonesian banks reject to sell mortgages to foreigners and whether foreigners are actually enticed to buy property in Indonesia?

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