Global real estate services firm Jones Lang LaSalle expects condominium sales in Indonesia to post a record-breaking figure in 2014, particularly supported by the current trend in Jakarta (Indonesia’s capital city) where people continue to shift to apartment living instead of detached or attached single-unit housing. Anton Sitorus, head of research at Jones Lang LaSalle, said that despite the weaker outlook for Indonesia’s property market, both developers and buyers have shown increased interest in developing and buying property.
Update COVID-19 in Indonesia: 365,240 confirmed infections, 12,617 deaths (19 October 2020)
19 October 2020 (closed)
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Jakarta Composite Index (5,126.33) +22.92 +0.45%
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Although Indonesia’s debt-to-GDP ratio is currently still at a safe level at roughly 32.8 percent, the country’s central bank (Bank Indonesia) expressed its concern about the high debt service ratio (DSR) and debt-to-export ratio. The DSR is the ratio of debt service payments (principal and interest) of a country to its export earnings. Generally, a healthy ratio is somewhere in the range of 0 and 20 percent. However, Indonesia’s DSR has risen from 20 percent in 2007 to 50 percent in 2014.
Indonesian presidential candidate Joko Widodo, more popularly known as Jokowi, intends to increase the government’s tax revenue by allowing foreigners to buy luxury apartments, worth at least IDR 2.5 billion (approximately USD $211,864), in the larger cities of Indonesia and on the island of Bali (a popular tourist destination). Currently, foreigners cannot buy property in Indonesia. However, indirect structures, such as the use of their Indonesian wife’s name or an agent are common, meaning that the state loses out on luxury tax income.
Colliers International, a leading global commercial real estate firm, expects West and South Jakarta to become promising locations for the development of high-rise (office) buildings. Associate Director for Research at Colliers International Ferry Salanto explained that Jakarta's infrastructure development plans - in particular new road construction - are the main reason why prospects of property development have become more promising in the Kebon Jeruk (West Jakarta) and T.B. Simatupang (South Jakarta) areas.
The Residential Property Price Survey still indicates slowing growth of Indonesian residential property prices (in the primary market) in the first quarter of 2014. The Residential Property Price Index grew 1.45 percent (quarter to quarter) in the first quarter of 2014 or 7.92 percent year-on-year, lower than the growth that was recorded in the previous quarter of 1.77 percent (qtq) or 11.51 percent (yoy). The slowdown occurred in all types of homes, but in particular the medium and large homes segment.
Growth of the Indonesian property sector, estimated at 10 to 15 percent in 2014, boosts sales of ceramics. Similarly, the nation's construction sector - which grew 7 percent per year on average between 2009 and 2013 - stimulates the ceramic industry. This year, revenue in the Indonesian ceramic industry is projected at IDR 34 trillion (USD $3.0 billion). About 85 percent of total revenue in the country's ceramic industry is forecast to be generated through domestic sales, the remainder through exports abroad.
At the end of last week, Jakarta Governor Joko Widodo (better known as Jokowi) inaugurated the Kota Tua revitalization program in North Jakarta. Kota Tua (Old Batavia) is the oldest part of Jakarta, spanning 1.3 square kilometres, and used to be the center of Dutch colonial rule in the 17th and 18th century (in the 19th century the Dutch moved its administrative center to the south). Today, Kota Tua still breathes a colonial atmosphere through the old architecture and museums, attracting tourists on a daily basis.
On 16 March 2014, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve economic matters such as the impact of Joko Widodo's run for presidency on financial markets, an analysis of Indonesia's current account deficit, an updated overview of the coal mining sector, Bank Indonesia's BI rate policy, and more.
According to a recent survey of Schroder Investment Management Indonesia, subsidiary of the British multinational asset management firm and a leading independent international asset management and private banking group, Indonesian investors feel more confident to invest in Indonesia in 2014. Director of Schroder Indonesia Michael Tjoajadi stated that confidence of Indonesian investors has increased due to improving economic conditions and the long-term prospects of Southeast Asia's largest economy.
According to research conducted by Citibank, Indonesians increasingly regard property as the most lucrative investment instrument, instead of cash, deposit or saving accounts. On second and third place come cash and insurance. Citibank conducts an annual survey through which the bank assesses Indonesians' ability to understand the importance of financial planning and implementing good financial discipline. The survey involves various groups based on gender, age, residency and income levels.
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In its most recent report, the Asian Development Bank (ADB) forecasts Indonesia to continue its robust economic growth. Last year, the economy of Indonesia expanded 6.23 percent, and according to the ADB this figure will rise to 6.4 percent in 2013 and 6.6 percent in 2014. However, since the start of April there have been some issues that are causing Indonesia's stock indices to go down. Although believed to be only temporary, it is worth taking a closer look.
We had hoped for a continuation of the Indonesia Stock Exchange (IHSG)'s rebound after forming a green candle. It failed, however, due to negative market sentiments brought on by the bailout of Cyprus. Also, selling pressures on American stock markets late last week blocked a potential longer rally. The IHSG felt the impact of the Dow Jones Industrial Average (DJIA) that fell after a weaker NY Empire State Manufacturing Index as well as Consumer Sentiment.
On Tuesday's trading day, the Indonesia Stock Exchange (IHSG) was not able to maintain its record breaking upward movement. China's possible decision to limit credit growth in the property sector and the election in Italy contributed significantly to the decline of the IHSG. Moreover, it was influenced by poor openings of European stock markets. Investors thus decided to engage in profit taking, while waiting for further global developments.
The combination of the downgrade of Britain's government bond rating to AA1, China's plan to limit its property growth, and a decline in the HSBC Manufacturing PMI, was not able to block the growth of the Indonesia Stock Exchange (IHSG) today. In particular the purchase appetite of foreign investors made the index move to a new record high. Positive openings of European stock markets also provided a boost for the IHSG.
Both Indonesia's cement production and cement consumption have risen rapidly in recent years. As the country has been showing solid economic growth for a decade - and is forecast to continue this growth -, property and infrastructure projects have grown in number accordingly, thus increasing demand for building materials such as cement. Moreover, the government is committed to enhance the country's much-needed infrastructure development.
Associated businesses Property
- Ciputra Development
- Cowell Development
- Duta Anggada Realty
- Duta Pertiwi
- Gading Development
- Hanson International
- Holcim Indonesia
- Indocement Tunggal Prakarsa
- Intiland Development
- Kawasan Industri Jababeka