Residential Real Estate Market in Indonesia - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

The Indonesian real estate market is expected to register a CAGR of 17. 63% during the forecast period. The demand for the housing market is expected to be driven by Indonesia’s favorable demographic composition, increasing urbanization, rising per capita income of people, and a significant young population, in the country, emerging as first-time homebuyers in the next few years.

Lyon, FRANCE


New York, May 12, 2021 (GLOBE NEWSWIRE) -- Reportlinker.com announces the release of the report "Residential Real Estate Market in Indonesia - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)" - https://www.reportlinker.com/p06067772/?utm_source=GNW
Meanwhile, more developers are focusing on building affordable apartments in the mid-low segment targeting genuine homebuyers. This has also intensified the competition amongst such products and is expected to continue in the near future.
- The Indonesian government also introduced the ’One Million Houses’ (OMH) program, to construct at least 1 million units per year, and nearly 1.13 million houses were built in 2018, as part of the efforts to reduce the country’s current housing backlog. The one million housing program intends to address the lack of investment in the property market and to reduce the 7.6 million shortfall, in housing, to 5.4 million by this year.
- The demand for residential property, both in landed houses and vertical housing, is expected to increase further after the government’s infrastructure projects, i.e., mass rapid transit (MRT), light rail transit (LRT), TOD (transit-oriented development) in commuter line stations, and new toll roads that were likely to be completed in 2019.

Key Market Trends
Jakarta Emerging as a Prime Rental Market

Despite the rapid growth of the Indonesian property market in recent years, houses and apartments are still among the cheapest in the region. As per market estimates, the average price for a 120 sq. m property in Jakarta is USD 2,692 per sq. m, which is significantly cheaper than the prime locations in Malaysia, Cambodia, the Philippines, and Thailand.

Increasing disposable incomes and migration of Indonesians to Jakarta, in search of better employment, makes Jakarta an attractive rental market for both buyers and investors. As per reports, Indonesia is amongst the list of countries where buy-to-let property earns the highest returns, with an excellent typical gross rental yield of 8.9% per annum in 2019.

Rising Residential Property Sales in the Country

As per estimates, the residential property sales in Indonesia increased by nearly 20.15% Y-o-Y in the first half of 2018, up sharply from a decline of 34.53% in 2017. Small properties led the demand surge, followed by medium houses and big houses. In order to meet the property demand, the Indonesian government adopted several measures, such as lowering the key interest rates, giving tax incentives to Indonesian REITs, eased restrictions on individual foreign ownership, and increased loan-to-value ratios.

The government also increased the price threshold for luxury property taxes, to encourage home buying in Indonesia. The 20% tax will now be applied only to any purchase of landed property or apartment worth at least IDR 30 billion (USD 2.10 million). Some of the major apartment projects that were completed in 2018 were – Ciputra International (San Francisco Tower) by Ciputra Developers, Lavie Suits by Wilsor Group, and Nine Residences by Lippo Group.

Competitive Landscape
The Indonesian residential real estate market is highly competitive. The market is highly fragmented. Some of the major players present in the market include Agung Podomoro Land, Sinar Mas Land, Ciptura Group, and Tokyu Land Indonesia. The players are also adapting to technological trends, owing to the rising internet penetration and increasing expansion of e-commerce.

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