Jakarta’s property market is expected to hot up as a result of increased foreign investment.
2016 has seen record foreign investment being pumped into Indonesia. Data released by the country’s Investment Coordination Board recorded that foreign direct investment in the property sector from January to September reached USD 1.67 billion. This was up from the previous year which stood at USD 1.48 billion. For the same period, a 34 percent increase was witnessed for the number of projects that were funded by foreign investors.
The China Communication Construction Group (CCCG) led the pack of foreign property developers who have ensured that 2016 was crowned the biggest investment year in Jakarta’s residential property in nearly 10 years. Developers are citing the loosening of mortgage requirements that are likely to create a trigger for an increase in demand.
The tax on home sales has been reduced by 50 percent by the government, and Bank Indonesia reduced interest rates plus decreased the deposit required to purchase property. These stimuli aim to trigger the property market that over the last few years have seen transaction numbers decline. Land values have thus reduced and foreign investment companies have seen this as a window of opportunity to get onboard illustrating their confidence in the market.
CCCG are playing a pivotal role in the country’s property market with their USD 1 billion complex. The largest of its kind in Jakarta, it is aimed at young Indonesia couples who fall into the middle income earner brackets. Jakarta has some of the worst traffic in the world, and developers such as CCCG are noting that residents want to avoid having to tackle this by owning a home in the city centre with a minimal commute. This is fuelling urbanisation with a forecast of 200,000 people expected to move to Indonesia’s capital each year who will all need somewhere to live.
