Indonesia Real Estate Industry Update Quarter 4 2011

  • September 2013
  • -
  • Business Monitor International
  • -
  • 79 pages

Indonesia has a surging economy, growing urbanisation, relative political stability and strong savings and income growth. Consumer spending is growing, particularly from increasingly affluent sections of the population. This is a population that has doubled in 30 years, increasing the demand for property and providing a rapidly grow ing labour force.
Indonesia's economy grew by 6.5% year-on-year (y-o-y) in Q211, led by a healthy mix of private consumption, net exports and investment. We remain optimistic that the economy can continue to outperform the Asia-Pacific region. We see real Gross Domestic Product growth coming in at 5.9% this year (versus consensus expectations of 6.4%) before falling slightly to 5.8% in 2012 (versus consensus expectations of 6.5%). Another global recession would destabilise but not derail Indonesia's strong performance.
As a result of surging demand, the Indonesian property industry is looking up. It is among the top 10 fastest-growing segments in the economy in 2011. Despite looming international economic problems – especially in the US and the eurozone – demand for real estate development in Indonesia is likely to remain strong over the medium to long term.
Office space demand is expected to grow, driven by economic growth and foreign direct investment (FDI). Businesses are grow ing, upgrading and relocating. In the retail subsector, with ever-increasing consumer spending, demand will also continue to grow – especially from foreign retailers moving into the industry . The industrial subsector will also continue to grow in most centres due to grow ing manufacturing, as well as the potential for increases in productivity. Firms based in Korea and Taiwan are considering relocating factories from China to Indonesia.
One substantial hindrance to both the market and the economy as a whole is that Indonesia's physical infrastructure is substandard. The extent of future growth depends very much on the government’s ability to push through bureaucratic reforms that will allow much-needed infrastructure investment. It is not necessarily financial constraints that are acting as barriers to implementation but rather the regulatory environment and red tape. We remain confident, however, that with the support of public-private partnerships, fiscal policy will be conducive to infrastructure growth over the next few years. The government’s draft 2012 budget, released in August 2011, has allocated IDR168.1trn (US Dollar 19.67bn) for infrastructure spending by government institutions, up by 16% from the 2011 revised budget. However, some commentators believe that the budget still fails to prioritise the requirement for massive infrastructure expenditure.
Foreign direct investment has increased significantly in recent years since the global downturn, even though at 2% it has remained the same proportion of Gross Domestic Product since 2008. In Q410 and Q111, FDI for the whole economy was more than US Dollar 4bn, which compares well with the first three quarters of 2010, where FDI averaged around US Dollar 3bn. Indonesia still requires further FDI, especially to reduce inefficiencies.
Some of the key opportunities currently in the real estate industry are: - Government spending on infrastructure is expected to increase.
- We anticipate that commercial rents will generally continue to rise, some at approximately the same speed and some stabilising.
- There is a huge opportunity for the development of affordable housing. Some key risks to the current real estate industry are:
- Corruption is still rife and the legal system is unreliable and in need of reform. - The government’s version of Indonesia-registered REITs has a prohibitive tax burden. - The advent of political instability would threaten the country’s lower-risk image.

Table Of Contents

Executive Summary . 5
Industry SWOT Analysis .... 7
Indonesia Real Estate/Construction SWOT 7
Indonesia Economic Environment and Risk Analysis ... 8
Indonesia Business Environment SWOT .... 9
Real Estate Industry Overview 10
Real Estate Industry Analysis . 12
Data : Indonesia’s Real Estate Industry - Historic Rents, 2010 And 2011 (m2/month, USD ) 14
Data : Indonesia’s Real Estate Industry - Net Yields, 2011 And 2012 (%) .. 14
Data : Indonesia’s Real Estate Industry - Terms Of Rental Contract/Lease, Mid-2011 ... 15
Data : Indonesia’s Real Estate Industry - Available And Vacant Space, Mid-2011 (m2, unless stated) .... 15

Market Projection Scenario ... 16
Real Estate Outlook ... 16
Data : Indonesia’s Real Estate Industry - Rentals, from 2011 to 2012 (m²/month, USD ) ... 17
Data : Indonesia’s Real Estate Industry - Projection Net Yield, from 2008 to 2015 (%) . 18
Construction Market Outlook .. 19
Data : Indonesia Construction And Infrastructure Market Data .... 19
Data : Indonesia Construction And Infrastructure Market Data .... 21
Construction And Infrastructure Projection Scenario .... 23

Macroeconomic Data . 24
Data : Indonesia - Economic Activity . 26
Real Estate/Construction Business Environment Rating .... 27
Data : Asia Real Estate/Construction Business Environment Ratings ... 27
Indonesia’s RECBER . 28
Indonesia’s Business Environment . 30
Data : BMI Business And Operation Risk Ratings .. 30
Data : BMI Legal Framework Rating . 32
Data : Labour Force Quality .... 35
Data : Asia, Annual FDI Inflows ... 37
Data : Trade And Investment Ratings . 39

Competition Overview ... 41
Company Profiles ... 42
Adhi Karya .. 42
Holcim Indonesia .. 43
Jakarta Propertindo ... 45
Lippo Karawaci .... 46
Pakuwon Jati Tbk . 48
Semen Gresik ... 49
BMI Methodology ... 51
How We Generate Our Market Projections ... 51
Construction Market 52
Bank Lending ... 53
Real Estate/Construction Business Environment Rating ... 53
Data : Weighting Of Indicators 54
Project Finance Ratings Indicators .... 57
Data : Design And Construction Phase ... 57
Data : Commissioning And Operating Phase - Commercial Construction 58
Data : Commissioning And Operating Phase - Energy And Utilities .... 59
Data : Commissioning And Operating Phase - Transport 60
Sources .. 61

View This Report »

Find all the market research you need - instantly, in one place.

+1.2 Million Research Documents & Statistics +200,000 Trusted Public Sources 350 Industries With Global Coverage

24/7 Customer Support

Talk to Amrita

+1 718 303 2019

Purchase Reports From Reputable Market Research Publishers

World Housing Market

World Housing Market

  • $ 5 800
  • Industry report
  • July 2014
  • by Freedonia

World demand to rise 3.2%annually through 2018 Worldwide construction of new housingunits is projected to reach 62.0 million in2018 on 3.2 percent yearly advances from2013. Although global population growthis ...

Non-Residential Construction: Global Industry Guide

Non-Residential Construction: Global Industry Guide

  • $ 1 495
  • Industry report
  • July 2014
  • by MarketLine

Introduction Global Non-Residential Construction industry guide provides top-line qualitative and quantitative summary information including: market size (value 2009-13, and forecast to 2018). The guide ...

Real Estate: Global Industry Guide

Real Estate: Global Industry Guide

  • $ 995
  • Industry report
  • June 2014
  • by MarketLine

Introduction Global Real Estate industry guide provides top-line qualitative and quantitative summary information including: market size (value 2009-13, and forecast to 2018). The guide also contains descriptions ...


ReportLinker is an award-winning market research solution that finds, filters and organizes the latest industry data so you get all the market research you need - quickly, in one place.