Rising capital values, favourable interest rates and strong demand have created a promising environment for Indonesia’s real estate sector, which posted impressive expansion numbers in 2013. While the US and EU have struggled with the lingering effects of the global financial crisis, South-east Asia has powered on, with Indonesia topping the list of the world’s fastest growing luxury real estate markets in terms of price. A new loan-to-value ratio introduced in 2013 aims to protect against a property bubble, in part by requiring first-time home buyers to make a down payments of 30% of the purchase price, with this rising to 40% and 50%, respectively, for those purchasing a second or third home. Rapid population expansion, growth of the middle class and increasing road congestion in Jakarta mean that demand for properties in the city centre is expected to continue rising. Demand for office rental space, as well as for retail and hotel property, is also expected to continuing rising. Indonesia’s young population and growing consumer class will provide growing demand for property in the years ahead, and, as the country continues to strengthen its appeal as a location for doing business, the real estate market should remain an attractive option for investors over the longer term.
This chapter contains interviews with Michael Widjaja, Group CEO, Sinar Mas Land; Santoso Gunara, President Director, Danayasa Arthatama; and Eddy Sindoro, Paramount Enterprise.