Jakarta 2024 residential demand only half of 2023 levels

Overall takeup in Q4 2024 alone was at 87.8%.

According to a Colliers report, in Q4 2024, the overall take-up rate in Jakarta residential stood at 87.8%. On an annual basis, demand in 2024 was relatively low compared to 2023, primarily due to a limited number of project launches—only three in total— resulting in a limited supply.

“Historically, the postelection period has been a time of economic recovery, with demand for property typically rebounding as market confidence grows. However, the current condition did not follow this pattern,” the report said.

Here’s more from Colliers:

Despite efforts to stimulate the market, such as a reduction in interest rates—now standing at 6%—demand remained stagnant. As a result, demand in 2024 was only 50% of the level seen in the previous year.

Demand for existing units remained resilient. Of the 202 units sold during the quarter, nearly 70% were ready-to-occupy apartments. Since the implementation of government VAT incentives in 2021, Jakarta’s apartment market has experienced a gradual transition. Sales have progressively shifted from under-construction projects to a market predominantly led by completed projects. This trend persists as completed projects remain the primary beneficiaries of this incentive, being strategically positioned to maximize its advantage.

The Coordinating Ministry for Economic Affairs has formally announced the extension of the VAT incentive program into 2025, maintaining the existing scheme, where buyers will benefit from a full 100% VAT exemption in the first half of the year, followed by a 50% exemption in the second half. With this initiative in place, sales of completed units, particularly those priced below IDR 5 billion, are expected to continue outperforming underconstruction properties.

Nonetheless, while the program aims to mitigate the financial impact of the VAT increase to 12% in 2025, its influence is anticipated to diminish compared to 2024. This is due to the program having been extended multiple times since its introduction in 2021, with many buyers having already capitalized on the incentive in previous periods. As a result, the sense of urgency to purchase apartments may be considerably reduced moving forward.

Looking ahead to 2025, the property sector can anticipate several efforts stemming from the formation of the new cabinet. Alongside the VAT incentive mentioned earlier, other key initiatives include the potential elimination of the BPHTB (Acquisition Duty on Rights to Land and Buildings), as announced by the head of the housing task force, to make it easier for people to purchase property.

Moreover, the government’s initiative to construct 2 million apartments and 1 million landed houses annually across Indonesia is anticipated to create opportunities for affordable urban housing. In line with these efforts, Bank Indonesia’s extension of the 0% down payment policy through the relaxation of Loan to Value (LTV) ratios until 2025 (initially set to end Q4 2024) will further support the property market.

Fundamentally, these government-driven efforts are designed to invigorate the property market, creating a more favorable environment for both developers and buyers.