Market Trends of Real Estate Industry In Indonesia
Jakarta Emerging as a Prime Rental Market
In Jakarta, serviced apartments showed a continued improvement in average occupancy rate during 3Q 2023, reflecting the normalcy of business activities after the complete lifting of restrictions and increased demand from expatriates, especially from Asian countries, including Japan, South Korea, and India.
As of Q3 2023, the occupancy rate increased by about 3.5% QOQ to 60.5%. All serviced apartments in the CBD area maintained steady rental rates. In contrast, new supply in the form of new serviced apartment projects (Citadines Gatot Subroto and Grand Mansion Menteng by The Crest Collection) pushed rents up in the non-CBD area. The average rental rates registered were IDR 445,986/sq m/month (USD 28.85) and IDR410,707/sq m/month (USD 26.57) in the CBD and South Jakarta (including non-prime areas), respectively.
Experts expect some increment in the average rental rate given the forthcoming entry of new upscale serviced apartment projects that offer higher rental rates compared to the market.
Rising Residential Property Sales In Indonesia
- According to industry experts, Indonesia's residential property market remains slow, with the composite-16 property price index growing only by 1.53% in Q3 2022. When adjusted for inflation, property prices declined by 3.48%. When inflation is considered, only one of the eighteen major Indonesian cities recorded house price increases in Q3 2022.
- While the market showed improvements recently, it remains far below its pre-crisis levels. From 2018 to 2023, Indonesia's house price index averaged 103.04 points, reaching an all-time high of 107.26 points in Q2 of 2023 and a record low of 99.32 points in the first quarter of 2018.
- National laws effectively ban non-citizens from complete freehold ownership of the property, limiting their rights to a leasehold of a maximum of 80 to 100 years with no access to mortgage finance. In addition, the government has set a minimum price for real estate that can be bought by foreign investors, ranging from around USD 65,000 for an apartment in northern Sumatra to USD 325,000 for a house in Bali, Jakarta, and parts of Java.
