Although the macroeconomic situation in Indonesia remains relatively stable compared to the global economy, the domestic property market is still susceptible to the influence of the international real estate performance slowdown. According to the latest report from Colliers, the central bank’s interest rate hike has created a significant impact on property markets in Asia, America, and Europe. Factors such as high credit costs, low operational income, and property value decline due to high capitalization are reflective of this situation. Steve Atherton, Head of Capital Markets & Investment Services at Colliers Indonesia, stated that these conditions have generated negative sentiments affecting the more conservative foreign investment practices. “Foreign developers and those interested in investing in emerging markets, including Indonesia, are now more inclined to prioritize sectors with lower risks but offering high returns,” Steve revealed on Tuesday (20/6/2023).
Atherton emphasized the interconnectedness of the global capital markets, creating sentiments that permeate worldwide. While this slowdown affects the Indonesian property market to varying degrees, the office and apartment sectors are experiencing performance declines, prompting investors to adopt a highly conservative approach. Investors are becoming more selective in choosing projects considered secure and promising.
On the flip side, the retail and hospitality sectors are undergoing recovery with diverse transactions as investors seek solid partners with fair pricing offers. Although the data center and logistics center sectors are still considered healthy, there is a slowdown due to limitations on development opportunities by global players, aligning with the e-commerce business deceleration. However, there are positive growth projections in several regions with a land cost increase of around 9-10 percent.
Conversely, the landed housing sector stands out as one of the most robust property segments currently, attracting significant interest from foreign developers and private equity funds. “Local demand for housing remains strong, especially in Jabodetabek with a price range between Rp400 million and Rp2 billion,” he added.
Global property market slowdown, Impact on Indonesian real estate, Land housing sector.