Property market will benefit from the current state of play of Indonesia’s economy.
2017 is well underway. All eyes are on Trump who has taken his place in the White House. Every day the news is littered with stories about what his next move will be. But as America has had little investment in Indonesia in the past, lets rather look at what is happened on this side of the Pacific Ocean instead.
Well Indonesia had a good year in 2016. The financial markets performed well and South East Asia welcomed an increase in commodity prices. Plus more overseas investors dared to dabble in the property market due to the region’s growing middle class. The country’s president, Joko Widodo, has helped this with his tax amnesty. His plans to invest heavily on the infrastructure, which to be frank the lack of is a huge hindrance to the country, have had a positive influence.
According to Reuters, USD 2.8 billion of overseas investment was made in 2016. Big names such as Mitsubishi, Tokyu Land, Hongkong Land and Sime Darby all made their mark. Urbanisation is on the up. Jakarta welcomes 200,000 people new residents each year, and there are 55 million middle income families. All are helping to keep the residential market stable.
Owning a home has become even easier. Bank Indonesia cut interest rates three times throughout 2016. They also reduced the deposits required for a mortgage. In turn property transactions are expected to increase by 15 percent this year, as predicted by Indonesia Property Watch.
For business, things are looking rosy too. Indonesia was jumped up 15 places in the World Bank’s ‘Doing Business’ index. This put it in the top ten gainers, and was a result of the introduction of online tax filings. Plus the abolishing of minimal capital requirements for small and mid sized businesses also helped too.
As people’s disposable income grows, it will have a knock on effect to the rest of the economy. The property market should reap the benefits. So move aside Trump, the news is on Indonesia. This is one market to watch and the year ahead is looking good.