Positive outlook for the economy is having a knock on effect for property.
The sentiment for the Indonesian property market remains rosy. This is according to real estate firm Colliers International Indonesia. Ferry Salanto, associate director, anticipates that values for apartments, also known as vertical property, will increase by approximately 10 percent. This hike will be concentrated in Jakarta, Indonesia’s capital city.
This forecast for 2017 is well ahead of how the market progressed of late. Experiencing a slowdown over the last two years, vertical property increased in capital appreciation terms by just under four percent in 2016. The deceleration of the economy is cited as a catalyst for this. Many investors shy away from parting with their cash in a slower economic environment preferring to wait for improved conditions before dipping in. However the World Bank predict that for 2017 the economy will grow by 5.2 percent. This is ahead of the 5 percent increase experienced in 2016 and 4.8 percent in 2015.
Properties between IDR 300 million and 1 billion are expected to enjoy the highest increase in value. These are built geared to the middle classes. Additionally Salanto have noted that developers are shifting their strategies. Making units smaller in order to increase efficiency of space and thus to reduce the price tags. This is helping to entice more middle classes.
The supply in Jakarta for this year is expected to be in excess of 28,000 new units according to Colliers. This is ahead of last year that welcomed 24,298 new units. Many will be focused in West and South Jakarta. By 2020 the firm expect the capital city to be home to 247,000 apartment units.
Before the recent downturn, investors enjoyed increases on average of between 10 and 15 percent each year. This demonstrates that many investors should consider property as a long term investment strategy. Even though there may be blips in the market, typically the market always rises so consumers should not be put off by any downfalls and hold tight for the long run.
