Luxury Jakarta properties retain allure

The idea of luxury property may seem incongruous in the context of Jakarta, yet, according to Knight Frank, the Indonesian capital has the fastest-growing prime real estate in the world.

For two years in a row, Jakarta has topped Knight Frank's Prime Global Cities Index of luxury real estate markets in 30 cities, with top-end homes gaining 37.7 per cent in 2013, and 38 per cent in 2012. But, while the prestige factor usually underpins the growth of blue-chip property, in Jakarta's case, it is more likely a desire to escape the alternative.

In a notoriously polluted city where traffic jams have been called "inhumane", avoiding them by living close to work is the ultimate prize. There is limited supply of high-end property in the downtown/central business district (CBD), and few prospects, due to scarcity of land. Thus, says Hasan Pamudji, associate director of Knight Frank's research team, Jakarta is "one of the emerging property markets, despite its shortfalls".

Most buyers are wealthy Indonesians, whose coffers have been boosted by booming mining and commodity sectors, along with a few expatriates and top officials. Indonesia still does not allow foreign individual property ownership. For the rich - a sector forecast to more than double in the next decade - a luxury CBD condominium is just a second home. "Traffic jams create a strong demand to live closer to the workplaces," Pamudji says.

Property markets across Indonesia were expected to slow down this year, given the legislative election in April, and presidential election in July. Yet, Cushman & Wakefield data shows little evidence of that. Good sales were reported in existing and proposed condominium markets in the first quarter of this year, a period which saw 25 new launches. "The condominium price trend continued to increase, along with the growth of the land price," Cushman & Wakefield reports. The average price of 34.7 million rupiah (HK$22,781) per square metre for a CBD condominium represents a 33 per cent increase year-on-year, while average price growth in the prime sector was 24.3 per cent.

JLL's latest report shows that new launches in the first quarter were the highest in two years. With the addition of newly-completed projects - including Pakubuwono Terrace (North Tower) in South Jakarta; along with GP Residence in West Jakarta, and two towers (Presidential Suites and Ambassador Suites) in St Moritz mixed-use development - total stock of existing condominiums in Jakarta rose to approximately 91,330 units - 29 per cent of total inventory being in the CBD, and 21 per cent each in the secondary area of north and west Jakarta.