INDONESIA

a Country That Has Great
Potential Property Business

“The Republic of Indonesia is the fourth most populated country in the world. It is the largest archipelagic nation, with 17,508 islands scattered across the equator”

The name Indonesia derives from the Greek words Indós and nèsos, which means “island”. The name dates to the 18th century, far predating the formation of independent Indonesia.

In 1850, George Windsor Earl, an English ethnologist, proposed the terms Indunesians — and, his preference, Malayunesians — for the inhabitants of the “Indian Archipelago or Malayan Archipelago”.

Bali tak pernah sepi dari kunjungan wisata

The five largest islands are: Java, Sumatra,Kalimantan (shared with Borneo), New Guinea(shared with Papua New Guinea) and Sulawesi. Indonesia’s tropical climate has two distinct monsoonal seasons: wet and dry. Because of its size, geography and climate, the country supports the second highest level of biodiversity in the world.

Indonesia has a long and colourful history. It has been an important trade region since the 7th century; this is why Indonesian culture today has Indian, Chinese, Malay and Arabic influences.

Nivata Residence @Ciputra Beach Resort

Indonesia’s diverse ethnicity brought forth rich forms of art. From the tediously carved Balinese furniture, to the elaborate intricacies of batik textiles, Indonesia is culturally famed throughout the world. Many cultural treasures have been influenced by Indian, Malay, Chinese, Islamic and European sources.

Indonesian cuisine, which varies by region and ethnicity, is well worth mentioning. The palate of choice though is more typically spicy than anything else, as well as dishes that used coconut milk, fish and chicken.

We have got to tell you some of the best locations spread across the archipelago. Maybe this is just part of it, but we hope to be a good information. In the next edition, we try to inform other places in Indonesia.

Jakarta

The largest city in Indonesia is the capital, Jakarta, the country’s centre of all things economic, cultural and political. It is a crowded city, the 12th most populous in the world. Like many bustling Asian metropolises, Jakarta has an impressive skyline. Skyscrapers, chic shopping areas and condominium residences are in the heart of the city.

The largest city in Indonesia is the capital, Jakarta, the country’s centre of all things economic, cultural and political. It is a crowded city, the 12th most populous in the world. Like many bustling Asian metropolises, Jakarta has an impressive skyline. Skyscrapers, chic shopping areas and condominium residences are in the heart of the city.

Jakarta is not usually a popular destination for tourists, more of a jumping point to get to Indonesia’s other attractions. But those that do get to spend a few days in the capital may surprise themselves. Those who can see beyond what first may come as a shock, will enjoy everything else Jakarta has to offer such as a pulsing nightlight, tasty cuisine, rich culture, and great shopping in modern shopping complexes.

Despite having slowed in recent years, there is still ample room for growth in Indonesia’s property sector, particularly strata title apartments in the capital city of Jakarta (‘strata title’ refers to the multi-level apartment blocks and horizontal subdivisions with shared areas). In 2015, a total of 46 property projects are expected to finish, supplying 24,954 new apartment units (with a combined value of USD $1.25 billion) to Jakarta, an 18.98 percent increase from last year’s new apartments realization.

In fact, the number of new apartments in Jakarta in 2015 can reach nearly 29,000 units if several property projects – that are currently being carried out – fail to finish before the year-end. Although the supply of new apartments is high in Jakarta, there are no indications that a property bubble is emerging as most apartments (approximately 70 percent) are purchased by end-users rather than speculative buyers.

Apartment sales in Jakarta have recovered after the presidential election (July 2014) as more and more Indonesians prefer to live in ‘vertical property’ in the central areas of Jakarta (close to their offices to avoid time-consuming traveling amid Jakarta’s heavy traffic congestion). Furthermore, due to limited available space in Jakarta (giving rise to rapidly increasing land prices) property developers focus on ‘vertical property’ (apartments, office towers and malls) to make efficient use of limited space.

Whereas the high demand for office space in CBD areas in Jakarta has prompted several major property developers to implement office-building projects to take advantage of the opportunities. Despite the slowing-down of the property sector, office space in the central business district (CBD) remains a lucrative business in Jakarta, with several office-building projects under construction to meet the rising demand.

Sources from property players say that most office buildings in the capital have an occupancy rate of above 90 percent. A lot of local and multinational companies as well as individual investors are interested in buying or renting office space. But the supply of office space is insufficient.

Office space in Jakarta not only shows an increase in occupancy rates, but also in rental rates. Grade A office buildings, for instance, have an average monthly rent of US$30 per square meter, while grade B buildings have an average monthly rent of $27 per square meter, and last but not least, grade C buildings have an average monthly rent of $19 per square meter.

The retail space market in Jakarta anticipates limited future supply due to a moratorium policy for new mall development, a global property consultant company Savills PCI Research said the capital city put in place the mall development moratorium in late 2011 under  then governor Fauzi Bowo, after the city experienced a boom in mall construction, triggering concerns that it may lead to deteriorating quality of life, through greater traffic jams and less public space.

In September 2013, Fauzi’s successor Joko Widodo extended the moratorium, but the current governor, Basuki Tjahaja Purnama, has not outright banned mall developments, saying as long as the new development does not exacerbate traffic congestion, he will allow it to go ahead.

Last year, retail space growth had already slowed due to the impacts of the economic slowdown. It said last year, only around 141,848 square meters of new retail space was added to the market. Jakarta saw the total supply of retail space rising 4.9 percent to about 2.8 million square meter last year, Savills’ report said.

This year, the new retail space supply will increase by 35,911 square meters, with development in West and South Jakarta. The consultant firm said as development of stand-alone shopping malls has become limited, additional retail space is expected to come from other commercial buildings, podiums or arcade centers in mixed-use development projects.

In view of the limited additional supply in the next three years, it is projected that occupancy will gradually increase to around 95 percent to 96 percent by 2018. Last year, occupancy rate was 92 percent. The figure has been above 90 percent over the past three years, thanks to robust expansion of local as well as foreign retailers from various sectors, including foods and beverages and lifestyle brands.

Bali

Known for its white sand beaches, surrounding coral reefs and distinct local culture, Bali (a prime area) is arguably Indonesia’s most popular tourist destination.

Decades ago, Bali’s economy was solely dependent on agriculture, however, its burgeoning tourism industry which lures thousands of foreign visitors, has made it one of the wealthiest regions in the country. Bali, although having been a tourism favourite for Australians for a very long time, is more recently undergoing somewhat of a gentrification process.

And not just gentrification in the property investment meaning of the word, but in regard to the evolution of both its tourism industry, as well as its domestic supply-and-demand ratios for native Indonesian rental market within the Bali island itself. And this is a good thing.

The island is in more recent years now starting to attract the Western dollar beyond just the Australian and New Zealand travellers who historically have dominated the market. The island is increasingly more attractive to US, Canadian, UK, and European holidaymakers too.

This is important to note because in order to make such an investment viable, there must be signs of strong and increasingly growing demand for holiday accommodation. And of demand, there is plenty.

The property business in Bali continues to flourish as investors are confident about the island’s business climate, thanks to the increasing number of tourists and ongoing infrastructure  improvement. Most of the investors are focusing on developing hotels, condotels (joint condominiums and hotels) and private villas.

The land demand for hotels, villas and condotels was booming, but the supply of land was decreasing. Not only is less land available, but most of the land on offer is leasehold tenure. Property offered with freehold tenure is now difficult to find.

The Balinese property market (versus the broader Indonesian market separately) indicating steady capital growth over the past 10 years. The island is much more politically stable now than previous years, and is actually higher on the “desirability” list for internal migration for Indonesians due to this greater stability.

Surabaya

The capital of East Java, is Indonesia’s second largest city and one of the largest cities in Southeast Asia, having a population of around three million.

The city, known as the “city of heroes” as it played a great role during the Indonesian National Revolution, has 31 sub-districts and 163 villages. Its multi-ethnic population consists of Arabic, Chinese, Indian, Malaysian, and European, as well as Surabaya, Madura and other island natives. Many of its citizens work in the retail industry.

The very modern city, which features multiplexes, high towers, large shopping centres, and six-lane freeways, serves as the province’s main commercial centre and seaport. Surabaya has a strong maritime heritage and is the home of the Indonesian navy’s Eastern Armada.

The first and biggest residential development in Surabaya is CitraRaya Surabaya, opened in 1993. It took inspiration from Singapore and promoted itself as “the Singapore of Surabaya”. It targets the middle- to upper-middle classes.

Several developments followed CitraRaya, including a members-only family club and an exclusive 18-hole golf course. North of CitraRaya is the Bukit Palma, re-launched in 2003 after being suspended in 2001 following the 1998 financial crisis. It offers affordable houses for middle-income buyers.

Palembang

South Sumatra’s provincial capital and the second largest city in Sumatra is the historic Palembang. It was once the capital city of the Hindu Empire Srivijaya.

Its closeness to the mouth of the Musi River makes it an important trade port. Palembang thrives in oil production, among other industries. The Musi River cuts along the sprawling city. The Ampera Bridge connects its two sides.

Musi River’s banks are dominated by houses on stilts built on piles. Most people live in Seberang Ulu on the southern bank, which is pretty crowded and chaotic. The northern bank, Seberang Ilir, is a commercial and residential district. The government offices are here, as well as many hotels, shops, and restaurants.

CitraGrand City is a large-scale project that will become a new icon development metropolis city of Palembang, South Sumatera. CitraGrand have the concept of Integrated Development New Town, which is balanced between development and commercial functions housing with international standards of planning, environmental friendly and protect the ecosystem and integrated infrastructure, thus ensuring a high level of comfort and good security.