Construction & Real Estate
From The Report: Indonesia 2013
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With foreign direct investment rising, factories being built and real estate booming, the construction sector in Indonesia is expanding rapidly. The government is undertaking programmes to improve infrastructure, building roads, airports, railways and ports. While Indonesia remains more consumption-oriented than places like China, investment is an increasingly important part of the mix. The construction sector is expected to continue to expand rapidly over the next few years as the property market sees further rapid growth. Unblocking bottlenecks, increasing capacity and improving efficiency are all vital tasks going forward as the sector evolves.
This chapter contains interviews with Ketut Budi Wijaya, President Director, Lippo Karawaci; and Harun Hajadi, Managing Director, Ciputra

Articles from this Chapter

Overview

Building confidence: A steady stream of projects is driving rapid growth in the industry
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With foreign direct investment (FDI) up, factories being built and real estate booming, the construction sector in Indonesia is expanding rapidly. The government is undertaking programmes to improve infrastructure, building roads, airports, railways and ports. This is partly the result of some long-delayed expenditure, with the country’s transport networks at capacity and in some places crumbling. The growth of the sector is also the consequence of fundamental, structural changes that seem…

Interview

Ketut Budi Wijaya, President Director, Lippo Karawaci: Interview
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Interview: Ketut Budi Wijaya What segments of the real estate market do you see as significant areas of opportunity? KETI BUDI WIJAYA: There will be major opportunities in real estate for the middle and upper-middle market, backed by the recent growth of the middle class. The market is still not that large, but it will grow sharply once this segment reaches a certain level of income. I was positively surprised when I heard President Susilo Bambang Yudhoyono comment that annual income per capita…

Interview

Harun Hajadi, Managing Director, Ciputra: Interview
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Interview: Harun Hajadi How will the recently imposed rule on down payment obligations affect the growth of the real estate sector in the short term? HARUN HAJADI: The 70% loan-to-value (LTV) ratio required by Bank Indonesia will have an overall impact on the sector, but it will mostly affect first-home buyers, as they are the main users of financial instruments for purchasing property. If the ultimate intent of Bank Indonesia is to slow down a potential overheating of the property market, this…

Analysis

Meet the makers: New production facilities mean business for construction firms
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The growth of Indonesia’s construction sector is largely being driven by a rapid ramping up of manufacturing investment. Until a few years ago the country was not favoured as a place to locate factories. A weak domestic market, substandard infrastructure, corruption, high interest rates, complex tax policies and better opportunities elsewhere discouraged most corporations from putting major assets on the ground. There were exceptions, such as the Japanese vehicle makers, but even they entered…

Overview

Hot property: Rapid growth in prices is set to continue for the foreseeable future
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After a decade-plus of going nowhere, the value of real estate and rental rates are rising so fast that Jakarta has been identified by PwC and the Urban Land Institute as the most promising property market in the region in 2013. Many forces are at work, some short term and others more long term and significant. Policies and trends suggest a solid base has been established. There are some clouds on the horizon – inflation, speculation, leverage, hot money and macroeconomics, the usual worries…

Analysis

Condominium conundrum: Reform and clarification on foreign ownership remain pressing needs
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Many countries in Asia have historically had weak property rights, outright restrictions on foreign ownership, or both. However, most have a strong bias toward property investment, and often view the health of the real estate market as an indicator of overall economic well-being. The result is a patchwork of regulations from Jakarta to Beijing that allows for a semblance of fractional ownership and foreign participation. The countries want property markets to be strong, so they allow for non-local…

Analysis

City of gold: The capital is seeing strong sales and high demand
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Even without clarity on foreign investment, the Indonesian property market is strong and on a sound footing. Demand, especially from end users, is robust, the macroeconomic situation is relatively good – growth rates are high and inflation is low – and direct investment is at record levels. The property market, especially at the high end, is exceptionally competitive. Developers are becoming more creative and innovative with their plans and in their marketing, and the Indonesian capital,…