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Indonesian Real Estate Viewed by Experts, 2019
AREA Press Release No. 513/2019: October 07, 2019

Dr.Sopon Pornchokchai, Ph.D. Dip.FIABCI, MRICS
President, Agency for Real Estate Affairs (AREA)

How did experts in Indonesia view the economy and real estate markets? Which sectors were among the best in 2019? Which were zones in Jakarta growing.  Which were growth cities in Indonesia and Where would the Indonesians buy properties abroad?

During September 13 to 14, 2019, Dr.Sopon Pornchokchai, President, Agency for Real Estate Affairs which was also President, FIABCI Thai was invited by FIABCI Indonesia to speak at the Asia Pacific Real Estate Congress which was held every two years.  Dr.Sopon conducted a survey of participants at the Congress who were Indonesian real estate experts.  Some 106 were interviewed at this Congress.

Assessment of Indonesian Economy and Real Estate Markets    
Item 2019 2020
Indonesian Economy 6.2 6.9
Indonesian Real Estate 6 6.7
Score: 10 = best, 1 = worst.    
Interview of Participants at the Asia Pacific Real Estate Congress    
Jakarta, September 13, 2019 by Dr.Sopon Pornchokchai    

Market Situation

For the respondents, Indonesian economy in 2019 was viewed at the score of 6.2 out of 10.  This implies that the performance of the economy was above average.  In 2020, the economy should be getting slightly better.  Therefore, it was viewed at 6.9.

In the case of real estate markets as a whole, it was viewed at 6.0 out of 10.  It implies that the situation was above the average.  It was somewhat worse than the situation of the economy at large.  In 2020, Indonesian real estate markets  would be getting somewhat at 6.7.  This implied that both the economy and the real estate markets of Indonesia were not in a boom period but were rather slow down.

Best Sectors of Investment, 2019  
Sector %
Houses & Lots 17%
Commercial 16%
Residential Apt 12%
Affordable Housing 11%
Apartments 10%
Industrial 7%
Office 7%
Shophouse 4%
Luxury Condominiums 3%
Premium Housing 3%
Hotels 2%
Mall 2%
Land 2%
Others 3%
Interview of Participants at the Asia Pacific Real Estate Congress  
Jakarta, September 13, 2019 by Dr.Sopon Pornchokchai  

Best Sectors for Investment

Houses & lots were the major sector for investment where it was recognized by some 17% of the opinion.  Commercial properties were ranked at the second in the priority (16%) It could be observed that during this moderate period in Indonesia, investors still realized the growth of commercial properties for investment.  The third in the priority was residential apartments as a whole with 10%.  Affordable housing  was not mentioned perhaps because  of the glut resulting from massive developments in the past

Other interesting sectors included industrial properties (7%), office spaces (7%), shophouses (4%).  In the period of a lot of conventional housing supplies, luxury condominiums and premium housing  where both possessed 3% of the preference could be a good option for developments.  The slow-down economy might not affect affluent families to buy a housing unit.

Salient Zones for Investment in Jakarta

According to this survey, South Jakarta was the most salient zone of developments in Jakarta (22%) followed by West Jakaarta (19%).  The third in the priority was North Jakarta (10%).  Other major areas included East Jakarta (8%), Tangerang (8%), Bekasi (5%), CBD of Jakaarta (3%) and the like.

Salient Zones for Investment in Jakarta  
Zones %
South Jakarta 22%
West Jakarta 19%
North Jakarta 10%
East Jakarta 8%
Tangerang 8%
Bekasi 5%
CBD 3%
Cengkareng 3%
PIK 3%
Serpong 3%
Bogor 2%
Cibubur 2%
Cikarang 2%
Depok 8%
Interview of Participants at the Asia Pacific Real Estate Congress  
Jakarta, September 13, 2019 by Dr.Sopon Pornchokchai  
   
Most Attractive Cities for Investment  
The survey results appeared in the following table:  
   
Most Attractive Cities for Investment  
Cities %
Surabaya 23%
Bali 20%
Balikpapan 10%
Bandung 10%
Karawang 8%
Makassar 8%
Banten 5%
Manado 5%
Others 13%
Interview of Participants at the Asia Pacific Real Estate Congress  
Jakarta, September 13, 2019 by Dr.Sopon Pornchokchai  

Apart from Jakarta, Surabaya was the first in the priority at 23% of the opinion of the experts followed by Bali at 20%, Balikpapan and Bandung at 10% each.  Other cities included Karawang at 8%, Makassar at 8%, Banten at 5%.  Although Indonesia had many big cities in the whole country, a few cities possessed a high potential for growth.

Countries of Preference to Buy  
Country %
Singapore 22%
Australia 18%
Malaysia 11%
Japan 8%
USA 6%
Vietnam 4%
Europe 4%
Thailand 4%
Canada 3%
UK 3%
China 3%
Korea 3%
New Zealand 2%
Switzerland 2%
Cambodia 1%
France 1%
philippines 1%
UAE 1%
HongKong 1%
Brunei 1%
Saudi Arabia 1%
Interview of Participants at the Asia Pacific Real Estate Congress  
Jakarta, September 13, 2019 by Dr.Sopon Pornchokchai  

Countries of Preference to Buy     

Actually, Indonesian investors had a variety of choices for buying property abroad.  However, the largest proportion of them preferred to buy properties in Singapore as the first in the priority (22%) followed by Australia (18%) and Malaysia (11%).  Vietnam, Europe and Thailand at 4% each.

This implied that Indonesian just wanted to buy properties in neighboring countries particularly Singapore, Australia and Malaysia.  Thailand which was very popular for Indo-China and Myanmar (CLMV countries) was not popular for Indonesia.  Perhaps, there was some certain physical distance between Indonesia and Thailand.

In sum, the economy and real estate markets of Indonesia were considered in a cool-down period where they could be somewhat better in 2020. Residential properties were among those more liquidated in the markets.  South Jakarta and West Jakarta were the two major development zones in Jakarta.  Surabaya and Bali were two major regional cities for developments.  Indonesian investors eyed Singapore, Australia and Malaysia as their targets to buy properties abroad.