Here’s a quick rundown of Indonesian real estate’s Q3 performance
Data centre investments are spilling over to the CBD.
Indonesia’s hotel and retail sectors saw a strong recovery in Q3 as restrictions on foreign travel were lifted. Similarly, landed housing, logistics, and data centres also logged strong performances according to a Colliers report.
“Meanwhile, developers are contending with rising construction and borrowing costs as the Bank of Indonesia (BI) raised interest rates twice in the quarter to control inflation,” the report added.
Here’s more from Colliers:
The office market remains soft but workers are returning to the office, which is resulting in greater tenant demand for space.
Investments in data centres are spilling over from the eastern industrial corridor into new projects started in the CBD, fringe CBD and West Jakarta areas.
Apartment demand remains weak but hotels and serviced apartments are performing better with new hotel construction underway in tourist hotspots.
Retail is on the comeback, especially for F&B outlets, fast fashion retailers and FMCGs with growing demand for freestanding stores.
While developers seeking to pass on rising construction and borrowing costs to consumers could dampen the property market, a number of factors will drive activity across segments. We expect data centre site selection to become more diverse and include locations in Jakarta’s city centre, the south and west.
In the office sector, companies are capitalising on base rents ranging around 30% - 50% lower than pre-Covid rates as the trend moves away from hybrid to office-based work.
Take-up in the apartment segment will remain weak until new projects aimed at lower- to middle- management workers come up in good locations. The hotels and hospitality segment will continue to rebound as the tourism, leisure and MICE segments play catch-up.
Expect to see more pressure on borrowers with loans in default. Investors will be more cautious, looking for faster investment horizon.