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Since the beginning of this year, the real estate sectors in Jakarta and Bali have shown diverse trends. The international commercial real estate agency, Colliers, has recently released its latest report on the developments in Jakarta’s office, apartment, expatriate housing, retail, and hotel sectors, as well as Bali’s evolving hospitality scene. This report, available on Colliers' official website as of July 9, 2024, provides insights into how these markets are adapting to economic shifts and evolving consumer preferences.
In Jakarta's bustling urban landscape, various sectors of the real estate market are experiencing distinct trends and challenges, reflecting the dynamic nature of Indonesia’s capital city.
Jakarta - Office Sector
As one of the business hubs in Indonesia, Jakarta offers many attractive opportunities for tenants, and it has numerous office spaces available. The tight competition among building owners creates a favourable negotiation environment for tenants to secure competitive lease rates.
As one of the business hubs in Indonesia, Jakarta offers many attractive opportunities for tenants, and it has numerous office spaces available. The tight competition among building owners creates a favourable negotiation environment for tenants to secure competitive lease rates.
Although no new projects have been initiated, the cumulative supply of office space is anticipated to increase by around 2% annually from 2024 to 2026.
Jakarta – Apartment Sector
Apartment sales in Jakarta are dominated by existing projects and driven by the termination of the VAT incentive policy.
Recent data indicates a projected increase in apartment sales, driven by the 100% VAT exemption on apartment purchases. This exemption encourages Indonesians to seize the opportunity. The positive impact of this VAT exemption is expected to sustain interest in this sector, with a projected growth of around 1% from 2024 to 2026.
Jakarta – Expatriate Housing Sector
The expatriate housing market in Jakarta continues to grow and consistently shows improvement compared to previous semesters. Many expatriates from various countries, especially from Asia such as India, Korea, and China, are starting to arrive in Jakarta. Additionally, there is a resurgence of expatriates from Japan. These expatriates work in diverse sectors, including mining, banking, pharmaceuticals, consulting, and logistics, typically in managerial to director positions.
Currently, most expatriates arrive without their families (single) and 90% of them prefer to live in apartments rather than landed houses. This is due to stagnant company budgets since the pandemic, with a reduction of around 30%, while property rental prices have increased.
In terms of location, single expatriates tend to choose areas such as SCBD and Sudirman due to their proximity to workplaces. Meanwhile, expatriates with families prefer residential complexes in Cilandak, Cipete, or Pondok Indah, which are close to educational institutions.
There are also cases where expatriates choose to live in South Jakarta, such as Pondok Indah, even though their offices are outside Jakarta, because of the well-established communities there. Generally, they tend to choose residential areas where communities from their home countries are well-formed.
Regarding housing preferences, expatriates generally seek new, modern, and minimalist designs, with increasing demand for facilities such as water purifiers and air cleaners in their accommodations.
Jakarta – Retail Sector
In Jakarta’s retail sectorproperty owners focus on maintaining occupancy rates, with rental rates expected to continue rising from 2024 to 2026. Vacancy rates are also projected to increase with the development of new shopping centres.
Service charges are expected to increase by around 3% annually. Retailers, especially in the F&B industry, remain optimistic due to high consumer demand. Fashion retailers are confident in capitalising on the growing “active lifestyle” trend.
Jakarta – Hotel Sector
The second quarter of 2024 posed challenges for Jakarta’s hotel industry,particularly after the Eid al-Fitr celebrations. Hotels that usually rely on business clients experienced a temporary decline in performance lasting up to two weeks post-holiday period.
However, in the first quarter of 2024, hotel occupancy rates are expected to continue rising alongside the increase in offline events and business activities. With rising occupancy, room rates are also expected to increase.
Bali – Hotel Sector
The developments of hotels in Bali occurred in various locations, especially in Sanur, known for its beach views, and Ubud, offering cliff panoramas in the highlands. Development in Ubud is now expanding to Payangan, a northern area towards Kintamani, to address congestion in central Ubud. However, North Bali has not attracted as many investors as other regions.
In the second quarter of 2024, there were no new hotel room additions in Bali, with a total of 58,854 rooms spread across 523 hotels. Looking ahead, several new hotels, especially five-star hotels, are projected to open.
From 2019 to Q2 2024, the largest growth in star-rated hotel rooms in Bali was in the five-star segment, with an additional 1,487 rooms, followed by four-star with 896 rooms. Until 2027, an additional 665 five-star hotel rooms and 162 four-star hotel rooms are expected, indicating continued expansion in Bali’s five-star hotel market.
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Disclaimer:
The information in this article is general and not intended as investment advice. Please consult financial and property experts before making investment decisions.
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