Construction & Real Estate
From The Report: Indonesia 2024
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Indonesia, as the largest economy in South-east Asia and the fourth-most-populous nation in the world, is experiencing a robust expansion in its construction and real estate sectors. The country’s ongoing urbanisation and favourable demographic trends are set to drive strong demand for residential and commercial properties, alongside leisure and recreational facilities. Significant government-led infrastructure projects, such as the construction of the new capital city, Nusantara and the Jakarta-Bandung high-speed rail, are expected to offer substantial opportunities for growth within the construction industry. Recent regulatory reforms, including the Job Creation Law, have been pivotal in attracting foreign investment into the real estate market, reflecting Indonesia’s increased openness to international capital. Despite facing challenges such as high material costs and a dependence on imported goods, the sector’s outlook remains optimistic. This positive trajectory is supported by a supportive regulatory framework and the government’s commitment to ambitious infrastructure development plans, which are anticipated to drive continued growth and transformation in the construction and real estate sectors.

Articles from this Chapter

Overview

Laying the foundation: Increased urbanisation, government-led initiatives and national strategic projects contribute to economic growth
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As the largest economy in Southeast Asia and the fourth most populous country in the world, the prospects for Indonesia’s construction and real estate sectors are enhanced by sustained urbanization and a demographic dividend that is expected to continue to stimulate demand for housing and leisure attractions. At the same time, large-scale government-backed infrastructure projects are providing a wealth of opportunities for construction companies to participate in the country’s ongoing development. Structure The Ministry of Public Works and Public Housing (PUPR) is the primary government body responsible for public infrastructure and social…

Analysis

Greener pastures: New capital city initiative offers unique investment opportunities with numerous ongoing large-scale infrastructure projects
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Located in East Kalimantan on the resource-rich island of Borneo, Nusantara has been designated as the new administrative capital of Indonesia. The plan – first announced in August 2019 – was ratified in January 2022 when the House of Representatives approved the new national capital city (IKN) Law, providing the legal basis for the capital’s relocation. The new city, which will span approximately 256,000 ha, is expected to cost Rp466trn ($30.3bn). Of this, 20% is expected to be sourced from the country’s budget, while the remaining 80% is expected to come from either public-private partnerships or private sector financing. Opportunities Relocating…

Analysis

Sustainable by design: Innovative practices contribute to carbon-neutral building
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As the global construction industry redefines its priorities to ensure sustainability, there is increasing recognition of the benefits of regenerative architecture as a means of lowering emissions. According to the “2023 Building Materials and the Climate: Constructing a New Future” report published by the UN Environment Programme (UNEP), the construction sector accounts for 37% of global energy-related greenhouse gas emissions. In light of this reality, a greater emphasis has been placed on sustainable architecture. The principle seeks to minimise the negative environmental impact of buildings by using sustainable, low-emissions materials…