Over the last decade in Indonesia, the real estate sector has shown encouraging growth driven by a growing middle class and national economic growth. Even better, there is plenty of room for real estate expansion in Indonesia in the next few years. Certainly, the main factor behind the acceleration of the Indonesian real estate market is growing demand supported by greater consumer confidence.
Real Estate Development in Indonesia
Commercial Real Estate
There have been important transformations in major cities in Indonesia such as Jakarta, Surabaya, Jabodebek, Banten, Bali and Bandung. Among the real estate for residential, commercial, retail, hotel and industrial segments, skyscrapers dominate these cities in the form of office buildings and apartments, especially in business districts. Compared to the previous year, 2017, there was an increase in the vacancy rate office, which reached 18.4% or an increase of 2.7%.
Jakarta deserves a separate discussion as a real estate market as most new real estate projects were sold well before construction was completed, demonstrating how high demand is compared to supply. From 2017 to 2019, according to Colliers International, 31 new commercial buildings will operate in Jakarta, where 11 of the 31 buildings are located in the Sudirman area.
Real Estate for Living
In 2017, real estate for residential use in Indonesia has shown growth due to policies issued by the Indonesian government to develop flats for low-income people. As a result, many real estate investors and buyers are benefiting from this sector and expect even better performance in 2018.
This is because in 2018, more government infrastructure construction projects will be completed and their operational activities will be carried out soon. In addition, government companies and the private sector have worked together to provide access to People’s Loan (KPR) for illegal workers. This combined effort is expected to help the real estate sector set new growth records in 2018.
Loans for Real Estate in Indonesia
In addition to mortgages, Bank Indonesia is offering low interest rates in 2017 for the simple house initiative. In addition, Indonesia is reforming in recent years to a property and real estate investment trust (REIT) tax regime that is predicted to drive the growth of foreign direct investment significantly in 2018 and the next few years with strong growth in real estate.
According to International Media, foreign investment in real estate reached USD 2.8 billion in 2016. The wave of foreign investment was supported by one of the largest commercial real estate developers in Indonesia, namely a USD 1 billion tower developed by the China Communications Construction Company (CCCC). In 2017, other international companies such as Mitsubishi, Tokyo Land, Hongkong Land and Sime Darby also invested in the Indonesian real estate market.