\nThe archipelago\u2019s urban population continues to grow and undergo cultural change
\nIndonesia is an epic and multi-faceted place
\nWith Indonesia\u2019s affluent middle-class growing rapidly, the nation\u2019s property market looks set to ride out economic difficulties as consumer and investor demand increases
\nBy Cameron Bates
\nStraddling the equator for more than 5,000 kilometres, Indonesia is an epic and multi-faceted place. Nowhere are its vast contrasts better demonstrated than in the capital Jakarta where luxury vehicles inch through congested streets overlooked by low-paid construction workers labouring on the latest multi-million-dollar, mixed use-development projects.
\nDespite a downturn in GDP growth on the back of weak consumption, investment and exports, the residential property market continues to remain a bright spot thanks to an expanding middle-class and affluent consumer population, which currently stands at 75 million people and is expected to hit 141 million by 2020, according to a report by leading consultancy firm Boston Consulting Group.
\n\u201cIndonesian real estate is set for a significant uplift in 2016,\u201d Kian Moini, the co-founder of online real estate marketplace Lamudi, says. \u201cWith changes to foreign ownerships laws and various government stimulus packages coming into place, significant growth is predicted.\u201d
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\nJakarta, which was named the fastest growing luxury property market in the world in 2014 with price growth of 37.7 percent by Knight Frank, has since seen a decline of 11.2 percent due to a reduced number of expatriate arrivals and business travellers.
\nCompared to the average global growth of 2 percent, the country\u2019s capital remains one of the hotspots for luxury property in Asia, if not the world.
\nLocated in the mountains, the city of Bandung offers cool respite from the steamy lowlands
\nAlthough the slowdown continued in the first quarter of 2015, the property market was forecast to see growth throughout last year. But despite the high demand in the luxury segment, the mass market struggled. As the Lamudi Real Estate Market Report Indonesia 2015 noted: \u201cmany people [are]struggling to find housing in the city as real estate developers have been focusing on the luxury market. Moreover, most people do not qualify for subsidised housing from the government.\u201d
\nThe dearth of affordable housing has however resulted in increased demand \u2013 and subsequently pricing \u2013 in the rapidly expanding satellite cities surrounding Jakarta, notably southern Tangerang and Bekasi in West Java.
\nSuch spikes in several sub-sectors across many cities are expected to continue through 2016, says Johannes Spies, who heads design development for the Hong Kong-headquartered Townland Group and is in charge of the planning and design consultancy\u2019s Jakarta office.
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\n\u201cDesign has grown in diversity and complexity from a focus on mid- to high-end landed residential projects to complex integrated mixed-use developments with housing units across the entire income spectrum, where a single residential unit can cost a total of IDR100 million (USD7,500) or a luxury unit can cost the same per sqm,\u201d he says.
\nA greater desire for well-constructed and unique developments, according to Spies, will increase also competition among developers particularly in areas of price, funding strategies, conceptualising new ideas and design quality.<\/p>\n
\u201cUrbanisation, development demand and property booms will all continue in various sectors with an expected economic recovery in the next three years, but with greater demands on design quality and uniqueness,\u201d he adds. \u201cWe will also see new types of residential properties as Indonesia\u2019s urban population continues to grow and undergo cultural change.\u201d
\nSpies\u2019 firm Townland is involved in multiple projects throughout Indonesia but certain areas in particular have been identified as key areas for future growth \u2013 with Jakarta and its immediate environs leading the way.
\n\u201cWe believe that transit-oriented hubs will characterise the urban landscape with developers competing through design and location for their share of this prospective market,\u201d he says.
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\nIndonesia\u2019s behemoth capital will continue to undergo a major urbanisation-driven transformation, similar to those seen in Shanghai and Shenzhen in China in the coming years, and some of its peripheral cities are already reaping the rewards.
\nLocated on the eastern border within the Greater Jakarta region,Bekasi is the fastest-growing urban centre in Indonesia.Its proximity to toll road and train links to the Jakarta CBD, and the expansion of industrial zones and port developments nearby have made it a popular choice for investors, while
\nSerpong, also in Greater Jakarta, is another hugely attractive enclave. It was here that developer Summarecon enjoyed one of 2015\u2019s sales success stories with its Rainbow Springs project, which introduced the concept of condo-villas to the area.
\nExpectations are also high that Bandung, the capital of West Java, will become a model urban development in Indonesia with its architect mayor, Ridwan Khamil, driving an acclaimed smart city initiative, which provides platforms for citizens to actively participate in the city\u2019s development via smart technology and social media.
\nProperty observers have come to expect the unexpected in a country as huge and diverse as Indonesia
\nWhile Jakarta and West Java look set to enjoy more growth, the residential property market in Bali, Indonesia\u2019s most potent tourist draw, remains stagnant. Analysts believe that the government needs to invest in tourism infrastructure to counter the decline in commodities.
\n\u201cNew developments like the mixed-use, cliff-side Seven Heaven project in the south of the island \u2013 a development that in the past would have been a five-star hotel \u2013 will capitalise on the low supply of smaller high-quality units that appeal to both domestic and foreign buyers,\u201d said Spies.
\nThe inauguration ASEAN\u00a0Economic Community\u00a0is also expected to boost the local real estate sector in 2016, as well as plans to revise the current foreign ownership laws.
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\n\u201cA change in foreign ownership legislation will obviously carry momentum but nothing has been finalised yet,\u201d Todd Lauchlan, country head of Jones Lang LaSalle Indonesia. \u201cI think the biggest impact, in terms of market impact, of allowing foreigners to buy will be Bali. The demand is already there but hasn\u2019t really been satisfied by the current structure. It will also unlock other markets that have previously been under the radar.\u201d
\nWith foreign ownership reforms practically in the post and ambitious infrastructure projects underway, President Joko Widodo\u2019s government appears to be making many positive noises to make Indonesia more investor-friendly. Developers, meanwhile, are upping the ante in terms of quality and imagination when it comes to new projects. In a country as huge and diverse as Indonesia, observers have come to expect the unexpected, but all the signs point to a successful 2016 for the country\u2019s real estate sector.
\nGerbang tol Cikarang Utama
\nWhich infrastructure projects have gathered pace under the government of Indonesian president Joko Widodo?<\/p>\n
Various improvements to toll road alignments and new entry\/exit ramps in Java, Makassar (South Sulawesi) and a few other second tier cities in Sumatra and Sulawesi islands
\nCompletion of more sections of the Trans-Java Toll Road
\nTrans-Sumatra Toll Road (from Lampung to Banda Aceh) with developers already gearing up for developing new satellite towns of more than a 1,000 ha each near toll entry\/exit ramps
\nThe Bogor-Ciawi-Sukabumi Toll Road will give access to MNC Land\u2019s Lido Lakes Resort, a 2,000-ha property that will include Southeast Asia\u2019s top theme park and a Trump Luxury Homes estate
\nJakarta\u2019s upcoming MRT and LRT stations will be the catalyst for transit-oriented mixed-use developments near stations
\nLeading the transit-oriented development drive, developers of satellite townships like Summarecon Bekasi and Citra Maja Raya have government approvals to extend station development links to their properties, providing much quicker access to Central Jakarta
\nThough it remains controversial, a high-speed train proposal linking Jakarta and Bandung will see thousands of hectares on new developments near new stations such as Halim, Karawang, Walini and Tegal Luar<\/p>\n