Here’s a rundown of Indonesia’s property investment market in Q3

Except for the hotel and retail markets, the other sectors are expected to slow before 2025 ends.

In line with current economic conditions, the Indonesian property market continues to face significant challenges.

According to a Savills report, consumer purchasing power has not yet fully rebounded, competitive market pressures remain intense, and urban property prices are elevated.

Here’s more from Savills:

The retail market is currently posting a moderate performance, with stable rental prices. However, the purchasing power of the lower-middle class has yet to fully recover, putting pressure on tenant revenues. Additionally, mass demonstrations in late August through early September forced several malls to temporarily close operations, adding further strain to the sector. Nevertheless, despite weaker purchasing power, mall visitation has increased, driven by the ongoing transformation of malls into experiential destinations.

Hotel market performance was also affected by the recent demonstrations as some reservation cancellations have placed downward pressure on occupancy rates. Demand from government-initiated MICE travel has shown a slight improvement. Despite the fact that the current market activity is primarily being driven by corporate and business-related demand, government MICE demand is expected to remain a key engine for Indonesia’s hotel sector. This indicates a temporary shift in demand structure that may influence market dynamics in the medium term.

The office sector remained stable in Q3/2025 and active demand was observed from financial institutions, service firms, logistics operators, natural resources and mining companies, trading businesses, and, most notably, tech companies, which continue to dominate the market landscape. Rental rates have remained steady from Q1/2025, reflecting a cautious market environment amid subdued leasing demand.

Apartment demand remained constrained in Q3/2025, as evidenced by a slowdown in consumer purchasing activity. The government’s VAT incentive has not yet boosted sales, as buyers continue to prioritize liquidity preservation and cash savings over property acquisitions. This reflects a cautious investment stance amid heightened market uncertainty.

The industrial estate sector enjoyed a strong market performance in Q3/2025, underpinned by transactions by Chinese investors exploring expansion in Indonesia. Strong investor confidence in Indonesia’s domestic market continues to fuel demand for rental factory and warehouse facilities. Meanwhile, the electric vehicle and data center sectors have emerged as the key demand drivers, supporting higher absorption levels and contributing to upward pressure on industrial rental rates.

The positive economic outlook laid out by the Bank Indonesia is expected to stimulate the hotel and retail markets. However, other sectors are anticipated to slow toward the end of the year.