Property Sector of Indonesia: Still Rising but Growth Slows Temporarily
According to Ferry Salanto, Associate Research Director at Colliers International Indonesia, the weakening rupiah exchange rate against the US dollar in recent months has resulted in an increase of property sales in Indonesia, particularly apartments. Salanto says it is not just an investment for the buyer but also a matter of security. Property is currently a better and safer alternative to the holding of rupiahs. In the third quarter of 2013, property sales increased despite the higher benchmark interest rate and the tightening property credit environment.
Research by Colliers indicates that in quarter III-2013 the occupancy rate of apartments increased compared to the previous quarter. Jakarta's Central Business District (CBD) recorded a occupancy rate of 97.9 percent. In South Jakarta it was slightly lower at 97.6 percent, while outside the CBD district it was 90.1 percent.
Meanwhile, Jones Lang LaSalle predicts that growth of Indonesia's property market will cool down at the end of 2013 as well as in the first half of 2014 due to an uncertain macroeconomy. Moreover, the legislative and presidential elections in mid 2014 also contribute to uncertainty. These economic and political uncertainties cause a postponement of the start of some new property projects. In recent months these signs have already been visible according to Todd Lauchlan, country head of Jones LaSalle Indonesia. He expects growth of Indonesia's property sector to cool from now on but accelerate again after the elections in 2014.
Prices of property (in all sectors) have risen over 25 percent (yoy) during the last two years in Indonesia. Jones Lang LaSalle expects that in the last quarter of 2013 as well as in 2014 property prices will most likely not continue growing at a similar pace.