This article is from the Australian Property Journal archive
BOTH local and global property investors are closely monitoring the outcome of the Indonesian election.
63 millions of Indonesian voters turned out yesterday to choose between front runner Defence Minister Prabowo Subianto and two former provincial governors, Anies Baswedan and Ganjar Pranowo.
Indonesian President Joko Widodo is stepping down after serving the last of his two terms in office.
Whilst no political storm is expected financial and property markets remain cautious.
In recent years, the Indonesian property market has been somewhat sluggish however the Widow government has been trying to turn the property market around in recent years.
The apartment sector has flatlined over the past five years with the Indonesian government actively trying to incentivise investment in the apartment sector.
Sales in new apartment projects since the end of the COVID19 pandemic have slowed as has development of new stock.
Developers have been highly cautious of developing new stock given buyer sentiment.
According to Colliers, poor data, particularly in Indonesia’s capital, Jakarta has led to a price increase of just 1.73% over the three years from 2020 to 2023.
Supply in the apartment sector contributed just under 14,000 units in the same period across 24 projects; Colliers reported a massive 60% decrease compared to the three year period prior to the pandemic.
In Surabaya, Indonesia’s second largest city the picture is also stagnant with prices expected to grow at a rate of just 2-3% says Colliers.
In comparison, demand for standalone houses remains strong across Indonesia.
The Wikodo government unveiled a number of measures ahead of yesterday’s election in an attempt to revive the residential property sector.
Last November, the Indonesian government introduced fresh tax breaks to try and entice buyers for property purchases priced up to IDR2 billion (USD$126,000/AUD$195,000) that will last until June. After that, a 50% discount on VAT will be applied.
Wikodo government also eased restrictions on foreign buyers, allowing them to buy a property with a passport. Previously, buyers needed a limited or permanent stay permit card.
