Real Estate
From The Report: Indonesia 2014
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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.

Articles from this Chapter

Overview

A favourable environment: Strong fundamentals are driving market expansion
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Rising capital values, favourable interest rates and strong demand have created a favourable 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. Though GDP growth fell slightly below 6% for the first time in four years,…

Analysis

A new asset class: Underdeveloped so far, REITs have plenty of potential
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Since real estate investment trusts (REITs) were given the legislative green light in 2007, Indonesia’s real estate market has boomed. With annual price increases that have regularly been among the world’s highest, coupled with heightened investor interest and a track record of strong economic growth, there has also been a widespread expectation that real estate could become a major asset class on the local stock exchange. Yet while the Indonesian Stock Exchange (IDX) features many property developers…

Analysis

Room to grow: Demand for industrial land looks set to continue expanding
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While Indonesia’s GDP continues its steady climb and the middle class rapidly expands, many firms are looking at the country as a consumer market rather than strictly as an export hub. Domestic sales are rising, prompting suppliers to seek industrial land for expansion. Costs are increasing and capacity is maxing out, while food and beverage, building materials, chemicals, palm oil and metals producers are eager for more manufacturing space. Colliers International reported a 10.5% quarter-on-quarter…

Analysis

Go east: Opportunities are expanding on the island of Bali and beyond
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One of the fastest growing real estate regions within Indonesia in recent years has been east of Java – the residential, resort and hotel market on the island of Bali. Today, however, there are signs of a push even further afield – to islands in the south- and north-eastern parts of the country that have previously been off the international real estate radar. This expansion, driven by demographic and economic factors, has great promise, though it is also not without its risks, both in terms…

Interview

Santoso Gunara, President Director, Danayasa Arthatama: Interview
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Interview:Santoso Gunara To what extent does the future growth of the real estate sector depend on successful implementation of the 2011 Land Acquisition Law? SANTOSO GUNARA: Land acquisition is the single most complicated aspect of property deals in Indonesia. There are a significant number of laws, many of which have been inherited from the past and have never been modified. Property developers have to go through legal procedures solely related to land ownership. The government can step…

Interview

Eddy Sindoro, Chairman, Paramount Enterprise: Interview
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Interview:Eddy Sindoro What are the priorities for emerging townships and where is government assistance needed? EDDY SINDORO: Township developers have taken matters into their own hands with regard to the construction of hard infrastructure, public facilities infrastructure and management software infrastructure. However, for most, there is a primary focus on improving public transport via the construction of mass rapid transit (MRT) and monorail systems, such as those which are finally…