Continued confidence in Jakarta spurs development
Fakky Hidayat, Senior Associate Director (Advisory and Capital Market)
Given the rising growth of the Jakarta population resulting in heavy traffic congestion and more dense population, the year 2004 marked the booming growth of the Jakarta condominium market.
The growing number of young and single career professional women, increasing traffic congestion, change of lifestyle and security considerations also have prompted an increase in demand for living in high-rise condominiums near to the workplace that offer convenience, security and facilities.
During the first half of 2012, the Jakarta condominium market experienced a continued positive growth in prices on the back of positive buyer sentiment, lower interest rates and steady increases in sales. With the strong confidence in future development, developers continued to launch new projects with no signs of slowing down.
A large new supply of 8,040 units coming from a total of 17 completed condominium projects entered the market, bringing the total existing supply at the end of June 2012 to 91,540 units, compared to 81,316 units in the previous year.
With the pace of new supply acceleration, future supply is estimated to grow by about 53 per cent or 48,327 units between 2H 2012 and 2014.
Notably, the luxury or high-end condominium prices in Jakarta was at strong performances, increasing on average by 28.5 per cent (year on year) at the end of June 2012.
Existing supply remains limited, with only a handful of available luxury projects coming online in the pipeline for the next two years.
The new policy on a minimum 30 per cent down payment for housing loans is likely to affect the purchasing power on property for the middle and lower middle classes.
However, cash installment incentives and credits offered by developers will be expected to alleviate the burden to consumers.
The limited availability of land in Jakarta, particularly in the CBD and prime area, is expected to continue this year causing higher land price increments and lead to condominium development cost growth.
Strong competition is expected to remain with developers likely to continue offering attractive project concepts, reasonable pricing and flexible financing terms to generate more sales activity.
Demand for luxury condominiums will stay strong subject to global economic conditions affecting Indonesia’s pace of growth.