Net takeup of Indonesian non-CBD offices surges by 85% in Q1
But the country’s residential sector is leading growth in the property market.
Indonesian businessmen are optimistic about the future with 87% of business owners expecting their revenues to increase in the next 12 months, according to a Grant Thornton survey. This optimism was also reflected in the property sector with many project launches taking place over the last six months.
According to Savills, the residential sector (landed housing) is leading the growth as pent-up demand continues to generate strong sales in various projects particularly in the Greater Jakarta area. Big players such as Sinarmas Land, Summarecon and Alam Sutera are among the developers who have launched new clusters in their flagship townships to cater to rising demand from young families and millennials.
Here’s more from Savills:
The current market dynamic is also attracting some foreign developers to team-up with local developers, not only in the residential sector, but also in the commercial and industrial/logistics sector. In addition, we have also seen an increase in foreign developer participation in data centre development in Indonesia.
In Jakarta, demand rose in 2021, as the market gradually emerged from the pandemic slump. In the office market, net take-up in both CBD and Non-CBD expanded by 48% and 85% YoY, respectively. Tenant relocations and strong expansion among e-commerce and tech companies supported demand last year and is expected to continue to absorb vacant space and pipeline supply over the next one to two years.
Meanwhile in the retail sector, the easing of covid restrictions has encouraged people to return to the malls, which helped the increase in foot traffic and generated net take-up throughout the course of 2021.
Meanwhile, buying activity in the condominium market started off relatively quiet in 2022 because of the impact of Omicron earlier this year. Sales in Bodetabek (Greater Jakarta area) totaled only around 700 units in the first quarter, but we expect to see an increase in the following quarters along with the more confident market environment.
Overall, we expect to see more activity across sub-markets supported by Indonesia’s strong economic prospects and a positive business outlook. We also expect more foreign developer and investor participation in the property market especially in the logistics and industrial sector.
With global uncertainties, coupled with rising commodities prices and higher taxes remaining as challenges, the Indonesian government continues to focus on strengthening the domestic economy which will become a key factor in attracting global and overseas investors.