RealEstat.id (Jakarta) – The world continues to face several risks and uncertainties, including China's economic slowdown, commodity price volatility, geopolitical complexities in Ukraine-Russia and Palestine-Israel, alongside climate change and the increase in global oil prices. These factors are impacting global economic growth, which is projected to remain low at 2.9% in 2023 and 2.8% in 2024.
However, Handa Sulaiman, Vice Chairman of Cushman & Wakefield Indonesia, believes that Indonesia remains strong with a solid economic foundation, showing consistent 5% growth over seven consecutive quarters. The growth projection for Indonesia in 2024 is expected to reach 5.2%.
On the other hand, Indonesia's inflation in September 2023 remained low at 2.28%, with a high level of consumer confidence reflected in the Consumer Confidence Index (CCI), positive growth in the Real Sales Index, and a continuous trade surplus of USD 3.42 billion in September 2023, marking a surplus for 41 consecutive months.
Read More: 2022 Jakarta Property Market Overview and 2023 Outlook: Facing Global Economic Issue
Handa further mentioned, “Although the company's expansion is postponed due to the owners adopting a 'wait and see' approach in light of the elections, high-interest rates, and weakened external consumption, the 2024 election period is expected to contribute an additional approximately 0.3% to the economic growth projection. In the context of global economic uncertainties, the growth of the middle class becomes a primary pillar in supporting Indonesia's economic stability.”
As one of the world's leading real estate service companies who serves with dedication and innovation in the property sector, Cushman & Wakefield reviewed the greater Jakarta property market conditions in 2023 and explore 2024 projections in a virtual press conference on Thursday, 7 December 2023 by presenting Handa Sulaiman, Vice Chairman of Cushman & Wakefield Indonesia, Arief Rahardjo, Director of Strategic Consulting of Cushman & Wakefield and Lini Djafar, Managing Director of Cushman & Wakefield Indonesia.
Below is the data summary of the greater Jakarta property market from each sector by Arief Rahardjo, Director of Strategic Consulting of Cushman & Wakefield:
Read More: Impact of The 2024 General Election on Indonesia's Property Sectors
Jakarta CBD Office 2024
Supply
No new supply is expected to enter the Jakarta CBD Office market in 2024. The absence of new supply in 2024 is mainly due to the “on-hold” status of projects that have been at advance construction stage such as Gedung Indonesia Satu Tower North (62,600 sqm) and Gedung Indonesia Satu Tower South (68,600 sqm).
Demand
Demand continued to rebound in 2023, driven by corporate consolidation and a flight to quality. Net absorption of Grade A office space is forecast to reach 180,000 sqm in 2023. Net absorption is expected to slow down in 2024 as tenants will be in “wait and see” attitude and hold major decisions, in anticipation of the general election result. Occupancy, however, is expected to slightly improve with the absence of new office supply in 2024.
Rent Growth
Despite the ongoing positive net absorption and improvement in occupancy, landlords will still likely be very cautious in increasing their base rental. Gross rental rates are projected to slightly increase, mostly due to the increment of serviced charge component. Rental growth is expected to increase further in 2025 shall the general election go well which will lead to improved economic forecast.
Read More: How to Buy Property in Indonesia: A Foreigner's Guide
Jakarta Retail 2024
Supply
Only one new project was completed in 2023, adding 5,000 sqm (+0.1%) of space to the Jakarta retail market. Two major projects initially scheduled to open in 2023 will be deferred to 2024 and will add approximately 100,000 sqm (+2.1%) to Jakarta retail space.
Developers are moving away from the strata-title mall concept due to the perceived importance of retail experience. Some malls are redesigning to better cater the preferences of younger generation.
Supporting retail facilities within mixed-use developments, including offices and apartments, are gaining popularity, aligning with the trend of integrating retail facilities to support TransitOriented Developments (TOD).
Demand
The positive net absorption of retail space is expected to continue, but average vacancy rate will increase (+1.7%) due to the higher addition of new supply than the space absorption in 2024. The overall occupancy rate was maintained at 77.2% at the end of third quarter of 2023 (0.0% QoQ). As the recovery stage continues, international brands are showing interest to establish their presence with expansions plan in mind.
While the F&B segment continues to be the most active, sports/fashion, lifestyle, and entertainment brands are currently undergoing robust expansions, a trend that is expected to persist into the next year. Retailers are exploring omni-channel opportunities to adapt to the resurgence of consumer interest in traditional physical retail.
Rent Growth
Whilst post-pandemic market recovery has been observed, rental rates remained relatively stable at Rp808,500/sqm/month as retailers remain cautious on the anticipated economic uncertainties in the upcoming political year.
The service charge is projected to experience a slight increase in early 2024. Landlords will continue to make efforts to retain current tenants while proactively exploring opportunities for expansion.
Read More: Empowering The Real Estate Sector: Harnessing Energy Efficiency
Greater Jakarta Condominium 2024
Supply
About 20,000 condominium units are anticipated to be completed in the year 2024, which will be mainly distributed in South Jakarta, Bekasi, and Tangerang Area. Proposed supply is expected to continue growing, albeit not aggressively.
With the 2024 Indonesia’s presidential election, developers are still adopting a “wait and see” stance before deciding to launch new projects. The middle and upper-middle segments are expected to dominate the proposed supply, especially within South Jakarta, East Jakarta, and Bekasi Area.
Demand
The net take-up rate of condominium units is expected to improve in 2024. Developers continue to focus on marketing existing units, resulting majority of the net take-up rate is expected to be dominated by existing projects. Align with the projected economic growth, the condominium markets is expected to increase in the second semester of 2024.
Transaction in 2024 is projected to be dominated by lower-middle segment (< Rp 14 mio psm) and middle segment (Rp 15-22 mio psm). Occupancy rate in 2024 is expected to continue rising, especially for projects within the TOD (Transit-Oriented Development) Area.
Sales Price Growth
Prices are projected to grow gradually in the year 2024. Major price increment is expected to occur in Condominium projects within secondary areas, while price increments in other areas are projected to be relatively stable.
Developers are expected to offer various incentive programs, such as flexible payment plans, cash back in the form of lease guarantees, and free furniture promotions, to counter price competition from secondary market and deal with the current "wait and see" market conditions.
Read More: Impact of Global Property Market on The Indonesian Property Market
Jakarta Rental Apartment 2024
Supply
Several Serviced Apartment projects which were previously planned for completion in 2023, have been postponed the opening date to the following year. 3 new Serviced Apartment projects are expected to enter the market in 2024, namely Oakwood Fatmawati City Center, Ascott Menteng, and Parkroyal Serviced Suites.
Additional supply from Serviced Apartment sub-sector is estimated at 611 units, while from the condominium-for-lease sub-sector is estimated at 12,300 units. The largest additional supply will remain to come from condominium-for-lease sub-sector, representing 95% of new supply.
Demand
Net take-up is projected to increase by approximately 8.000 units in 2024 with 91% of absorption will be in rental condominiums. Demand for serviced apartment sub-sector is estimated to increase in 2024, especially from short-term demand with the return of business travels.
Vacancy rate is expected to decline as new demand projected to increase in 2024 even though it has not been fully returned to the pre-pandemic conditions.
Rent Growth
Rental rate of Rental apartments is expected to be stable throughout 2024 in response to the projected stable demand. Rental rate of Serviced Apartment sub-sector is projected to experience a slight increase, merely as adjustment of inflation. With the continued increasing demand for condominium-for-lease, rental rate of this sub sector is projected to rise.
Read More: Industrial and Logistics Driving Real Estate Investment Across Asia Pacific
Greater Jakarta Industrial 2024
Supply
As the available industrial land supply in favorable areas becomes limited, developers may face challenges in identifying appropriate locations to establish or expand their land bank. In 2023, there is an addition of 315 hectares of industrial land supply, including 145 hectares in Jatiluhur Industrial Smart City in Purwakarta Regency, and 100 hectares in Krakatau Industrial Estate Phase 2 in Cilegon.
The remaining 70 hectares represent the expansion of two industrial areas in the Bekasi area Future supplies are expected to come from industrial areas in Bekasi, Karawang, and surrounding areas Approximately 250 hectares of industrial land supply are estimated to enter the market in 2024.
Demand
Demand for high-tech industries, especially data centers, is not as strong as last year. However, demand for the automotive industry, particularly related to electric vehicles, remains relatively high. Additionally, sectors such as manufacturing, logistics, and chemicals are expected to remain attractive. The industrial land sales over the last 5 years remained stable, with only slight variations. The same demand trend is expected in 2024.
Rent Growth
The average price of industrial land stood at Rp. 2,695,000 per sqm, which is an increase of approximately 3.1% from that in the last year Potential price increment is expected in 2024, but it is limited to the favorable locations.
Warehouse Supply and Rental Rate Growth
In 2023, the vacancy rate of rental warehouses in the Jabodetabek area increase slightly because of new supply that led to high competition in the market. Vacancy rate will remain relatively unchanged. In 2024 due to high competition and new supplies.
Demand is still expected to come from third-party logistics, FMCG, and automotive sectors. Rental rate is expected to remain competitive and stand at the current level of Rp 78,000 per sqm/month. An addition supply of 280.000 sqm of rental warehouse space will enter the market in 2024.
Read More: Hotel Performance in Jakarta, Surabaya, and Bali Has Improved in Q2 2023
Jakarta Hotel 2024
Supply
The hotel market is still in the recovery stage, there will be no additional rooms in 2023 and most of proposed hotels are reschedule to 2024. The total cumulative supply of 3-star to luxury hotel rooms as per end of 2023 is 42,922 rooms. Approximately 1,354 hotel rooms located in Central Jakarta and the CBD are scheduled to operate in 2024 with the distribution of rooms as follows: 27% 3 Star, 48% 4 Star, 12% 5 Star, and 14% Luxury.
Demand
Total passenger arrivals at Soekarno-Hatta International Airport as per September 2023 reached approximately 18.5 million passengers. It is estimated that the target number of passengers in 2023 will be achieved. The positive growth in the number of visitors to Jakarta has had an impact on the increasingly active MICE activities in Jakarta.
The increase in MICE activities such as BUMN/ministerial/corporate institution meetings, international music concerts, sporting events and exhibitions has had a positive impact on increasing demand for hotel rooms in Jakarta Room vacancy rates until the end of 2023 continue to decline by 33.0%, 36.4%, 33.9%, 40.3% for 3, 4, 5 and Luxury star hotels, respectively. The overall room vacancy rate will continue to improve in the 2024 political activity year at 34.0%.
Average Room Rate Growth
Positive growth in room rate (ADR / night) is expected to continue in line with the persistent increase in demand for rooms, The average room rate (ADR / night) at the end of 2023 was recorded at: 3 stars - Rp. 460,570 (13% YoY); 4 Star - Rp. 816,320 (16% YoY); 5 Star - Rp. 1,791,130 (20% YoY); and Luxury - Rp. 2,253,460 (12.5% YoY). Room rates (ADR / night) have returned to pre-pandemic levels in 2019. Overall room rate (ADR / night) is projected to grow by around 16% in 2024.
Read More: Greater Jakarta Landed Residential: Tangerang Dominates New Supply
Landed Residential 2024
Supply
The cumulative supply of landed residential remained relatively stable throughout 2023. In late November 2023, the government provided incentives for the purchase of new homes under IDR 5 billion and full VAT exemption for houses with maximum Tax value of IDR 2 billion, which is applicable until June 2024. From July to December 2024, the government will grant a 50% VAT discount.
Even though the VAT incentive is applicable only to ready stock units, developers are expected to remain active and launch new products due to sustained demand. The cumulative supply of landed residential is projected to increase steadily by about 2.6% YoY in 2024.
Demand
The cumulative demand is anticipated to grow by around 2.8% in 2024. The government’s free VAT incentives are expected to be the primary driver of overall demand for landed residential throughout 2024. Furthermore, new policies related to facilitating foreigners in purchasing property in Indonesia using passports is also expected to contribute to demand in 2024, although not significantly.
Despite the often carrying negative sentiments of political years on real estate sector, developers see the 2024 elections as an opportunity due to the expected increase in purchasing power.
In November 2023, Bank of Indonesia opted to maintain the benchmark interest rate at 6% to manage inflation in 2024, which is perceived reasonably moderate with no excessive impact on mortgage rates (KPR). Nevertheless, developers will continue to offer appealing promotions and strategies to boost sales.
Price Growth
As inflation affect construction costs and infrastructure advancements in Jabodetabek such as MRT, LRT, and toll road expansions will lead to increase of land prices, the average selling prices will continue at upward trend in 2024.
Shall the macro economy improve as expected and the political sentiment remain positive, landed residential prices are expected to further rise, especially after the smooth conclusion of the 2024 elections.
Simak Berita dan Artikel Menarik Lainnya di Google News
