RealEstat.id (Jakarta) - As the capital city of Indonesia, Jakarta has seen an increasing number of luxury apartment projects over the past decades. Yet, compared to neighbouring countries, the luxury apartment market in Jakarta is relatively small and yet to attract interests from overseas investors so far.
On the other hand, a lot of Indonesian high net worth individuals (HNWIs) bought apartments offshore like in Singapore, Hong Kong, Sydney, even in US cities. In this article, Savills Indonesia try to explore various factors contributing to this phenomenon and why the local market lags from the others.
Luxury apartment is defined as premium grade residential property with spacious rooms and top amenities. They are typically located in prime districts such as the downtown or CBD Area.
Typical amenities in luxury apartments are of highest quality with exclusive ambience, while standard facilities normally include world class resort garden and sport facilities such as Olympic-size swimming pool, exclusive spa, high-end fitness, executive valet service and in several cases, complimented with fine dining restaurants.
In Jakarta, luxury apartment was initially introduced around early 1990s in Kebayoran Baru, South Jakarta with Apartment Permata Hijau among the first developments. Kebayoran Baru district is a popular location for expatriate community in Jakarta, thus it became a preferred area for pioneer projects as developers targeting expatriates as the primary users.
Later, luxury apartment projects expanded to strategic areas such as Kuningan, Senayan and Setiabudi, closer to Jakarta Commercial Business District to attract not only foreign expatriates, but also local rich families and investors.
Along with commercial developments in Jakarta CBD between late 1990s to 2000s, luxury apartments had also expanded in prime districts of Sudirman, Thamrin and Gatot Subroto, with more high-end projects which typically branded with international five-star hotel-operator to manage the premises and its facilities.
Luxury apartment developments in Jakarta reached its peak around early 2000s then in 2012 but later slowed down from 2016 onwards. Amid some new projects between 2017 and 2019, supply growth is anticipated to remain soft until 2023.
In order to help and support market growth, Ministry of Finance issued Luxury Tax (PPNBM) amendment in 2019–since then buyers are required to pay 20% PPNBM for apartment priced at above Rp30 billion–previously Rp10 billion.
In term of supply distribution, Jakarta CBD contributes more than half of total luxury apartment supply in Jakarta, with around 56%. Meanwhile, as a popular district for expats and affluent community, South Jakarta dominates the existing supply in the Non-CBD area, accounted at 36%. Prime areas in this region include Kemang, Pondok Indah and Dharmawangsa.
Recently, a number of foreign developers had also participated in the luxury apartment development in Jakarta. These foreign players were attracted to expand here due to large number of local HNWIs from major cities like Jakarta, Surabaya and Medan. Some of their projects are labelled or linked to international chain hotels. Recent entrants include:
• Hongkong Land completed the development Anandamaya Suites in prime Sudirman area.
• Pollux Properties from Singapore launched Pollux Sky Suites in Mega Kuningan district.
• Sun and Moon Dharmawangsa by Tatemono Japan launched a high-end project in plush area of Dharmawangsa, an upscale residential neighborhood close to the CBD.
Price Trends in Jakarta
Prime residential areas in South Jakarta are located relatively close to the CBD area for example Senayan and SCBD area, thus these areas are highly preferred by most buyers. In 2012, average price in South Jakarta rose significantly to around Rp 24mil/sqm, increased by around 63% from Rp 14,7mil/sqm in previous year. By 2019, the average price of luxury apartment in this region stood at around Rp 48mil/sqm.
As the most prime district in the capital city, apartment projects in Jakarta CBD command the highest level compared to other regions. The peak of price growth took place between 2013 and 2014 period, which resulted at average market price of around Rp 55 mil/sqm. Along with the softening in the past couple of years, the average price in Jakarta CBD now stood at around Rp 52 mil/sqm.
West and North Jakarta are popular location among local Chinese affluent community. There are a number of quality developments in this region, yet compared to CBD and South Jakarta, the average price in West and Noarthj Jakarta are much lower. The average price in 2017 was around Rp 27mil/sqm and relatively stable at that level until now.