Construction & Real Estate
From The Report: Indonesia 2019
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Supported by strong fundamentals, Indonesia continues to break ground on major construction projects. Fuelled by a comprehensive public infrastructure agenda, large-scale developments have become the norm. However, while the construction sector remains an important pillar of the country’s economy, project development is still hindered by domestic obstacles, including a lengthy land-acquisition process. On the back of a massive infrastructure agenda, new real-estate projects have driven growth in Indonesia’s property sector in recent years. A colourful mix of cultures has influenced the architectural layout of the capital city Jakarta, which is one of the many features that have attracted investors from around the world. While the government of Indonesia has pursued initiatives to bolster property investment, however, currency depreciation, political uncertainty and rising interest rates constrained growth in 2018. This chapter also contains interviews from Basuki Hadimuljono, Minister of Public Works and Housing, and David Cheadle, Managing Director, Cushman & Wakefield.

Articles from this Chapter

Overview

Rising high: Major infrastructure projects support construction pipeline and domestic materials suppliers
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Supported by strong fundamentals, Indonesia continues to break ground on major construction projects. Fuelled by a comprehensive public infrastructure agenda, large-scale developments have become the norm. However, while the construction sector remains an important pillar of the country’s economy, project development is still hindered by domestic obstacles, including a lengthy land acquisition process. At the same time, local manufacturers of building materials continue to face pressure…

Analysis

New sense of ownership: Reform efforts are easing the land acquisition process
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Amid efforts to accelerate the delivery of large-scale infrastructure projects, reform of the country’s legal framework governing land ownership has become an important enabler of development. On the back of rising infrastructure growth in recent years, land procurement executors have been formally encouraged to acquire suitable land, with pressure coming both from the general public and government bodies, who want to see new projects come on-line swiftly without experiencing major delays. The…

Interview

Building progress: Basuki Hadimuljono, Minister of Public Works and Housing, on increasing collaboration and boosting service areas
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Interview:Basuki Hadimuljono To what extent is the government prioritising private sector participation, notably foreign contractors, in new construction projects? BASUKI HADIMULJONO: The government is encouraging private sector participation in the construction sector in particular. For this reason, the Ministry of Public Works and Housing (MPWH) established a regulation in May 2018 dictating that state-owned construction service providers are not to participate in public tenders with a…

Overview

Outside appeal: Foreign investment remains a key driver of real estate growth
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On the back of a massive infrastructure agenda, new real estate projects have driven growth in Indonesia’s property sector in recent years. A colourful mix of cultures has influenced the architectural layout of the capital city Jakarta, which is one of the many features that have attracted investors from around the world. However, while the government of Indonesia has pursued initiatives to bolster property investment, currency depreciation, political uncertainty and rising interest rates…

Analysis

No place like home: Schemes to address the housing shortfall encourage residential construction and spur overall growth
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Indonesia has a significant and growing shortfall of housing. Existing supply is in poor condition and demand is rising for new units. This is especially true for affordable housing in urban areas, where more than one-fifth of the population live in slums. Recognising the issue, the government unveiled a series of policies aimed at significantly augmenting housing supply. Boosting Supply Outlined in Joko Widodo’s 2014 presidential manifesto, the “One Million Houses” (OMH) programme…

Interview

Diversified spectrum: David Cheadle, Managing Director, Cushman & Wakefield Indonesia, on current trends and opportunities
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Interview:David Cheadle What are some of the major challenges facing the Indonesian real estate market? DAVID CHEADLE: From an institutional investor and private equity standpoint, Indonesia’s market can be a challenging one to operate in because Indonesians have historically preferred to build or purchase properties and then hold onto them. Indeed, traditional blue-chip real estate investment transactions are almost unheard of. In addition, given the current socio-economic climate a price…

Analysis

Smart thinking: New ICT initiative ready to transform major urban areas
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As residents move away from rural areas, cities in Indonesia are increasingly feeling the pressures of urbanisation. To improve quality of life in increasingly congested urban centres, the government has adopted the 100 Smart City Movement, an initiative that aims to establish 100 technologically advanced cities across the archipelago by the end of 2019. The movement is set to transform urban planning – and, by extension, the real estate sector – by adopting ICT solutions to promote a…