In 2014 Indonesia will held its legislative and presidential election (scheduled on 9 April and 9 July). It will be Indonesia's third direct presidential election. However, the country seems to be lacking
two factors. With no strong political figure on the horizon and a
current economic slowdown, the uncertainty and risk could be somewhat
higher this time round. It can be seen from the last quarter that the
market is taking a wait-and-see approach. In line with slowing economic expansion of Indonesia, the country's property sector also decelerated. If the elections will run orderly and results are well-received
by the market then the sector can accelerate again
The last three years have been very strong as Indonesia’s economy continued to perform strongly with its large, increasingly affluent, young and urbanizing population underpinning demand for all types of real estate. When we combine this with ultra-loose monetary policy from across the world, the result was a very conducive environment for the property market.
However, in the last semester the market has beginning a slowdown. While growth has remained positive, the speed of price increases and absorption rates has slowed from the record levels over the past 2 years. The impact by sector will be as follows:
The last three years have been very strong as Indonesia’s economy continued to perform strongly with its large, increasingly affluent, young and urbanizing population underpinning demand for all types of real estate. When we combine this with ultra-loose monetary policy from across the world, the result was a very conducive environment for the property market.
However, in the last semester the market has beginning a slowdown. While growth has remained positive, the speed of price increases and absorption rates has slowed from the record levels over the past 2 years. The impact by sector will be as follows:
- Office, scarcity of new supply and the on-going process of companies upgrading their space will mean that the market should remain firmly in favor of the landlord, particularly at the high-end of the market, for at least the next two years. Rents will continue to rise albeit at a slower pace throughout 2014.
- Retail, The retail property sector will continue to remain solid as occupancy levels remain at an all-time high and demand from local and foreign retailers to enter and expand their presence in the country continues. Mall rentals will continue a steady increase over 2014.
- Condominiums, the demand for condominiums over the past three years has been very strong as Jakartans have taken to inner city living.
- Hotel, the hospitality sector has been a net beneficiary of the depreciating rupiah with occupancy levels, room rates and resultant land and capital values continuing to increase on continued strong demand.
