The Indonesia Real Estate report examines the Commercial Office, Retail and Industrial segments in the context of a consistently strong performing market which, in spite of efforts to improve the business environment and continued investor interest, is slowing.
With a focus on the three principal cities of Jakarta, Bandung and Bali, the report covers the rental market performance in terms of rates and yields over the past 18 months and examines how best to maximise returns in the commercial real estate market, while minimising investment risk and exploring the impact of international headwinds on a market which has historically proven itself to be resilient. The key potential growth areas driven by increasing activity on the part of international investors, favourable fundamentals and the potential of the archipelago's consumption driven economy are also explored alongside corporate growth strategies looking to both domestic and international channels for growth.
As such there is considerable optimism in the Indonesian commercial property market. The last few years have seen impressive growth in the Indonesian real estate sector. Rents were hardly touched by the global financial crisis and have, in fact, generally increased over the past few years. Our latest data collection in July 2012 revealed that rents continue to soar across the majority of cities and commercial real estate subsectors.
One substantial hindrance to both the industry and the economy as a whole is that Indonesia's physical infrastructure is substandard. The extent of future growth depends very much on the government's ability to push through bureaucratic reforms that will allow much-needed infrastructure investment, and the recent approval of the land acquisition bill is an important step in the right direction
- While Indonesia will likely outperform its regional peers in 2012, growth will slow from 2011's 6.5% rate as the economy faces both external headwinds and domestic constraints. We have downgraded our headline GDP growth forecast for 2012 from 5.8% to 5.4% as a result of downward revisions to our gross fixed capital growth (8.5% to 7.5%) and private consumption (5.3% to 4.5%) forecasts, as we expect these sectors to be hampered by a deteriorating investment climate.
- We are maintaining our 6.9% growth forecast for Indonesia's construction sector in 2012. Although construction activity in the first quarter of this year was a strong 7.8% year-on-year (yo- y), the reversal in conducive monetary conditions for construction activity and the poor outlook for the global economy are expected to dampen construction activity over the rest of 2012. In addition, we see a real risk that the construction sector fails to realise its long-term growth potential, as there is a growing lack of political will to carry out the regulatory reforms required to unlock private sector investment demand. To capture this risk, we have revised down construction real growth to 7.7% (from 8.2% previously) per annum between 2012 and 2021.
- Our latest in country interviews – conducted in July of 2012 – and covering market performance for H112 reveal the market's strength, the industrial sector in particular has benefitted spectacularly by way of comparative annual performance.The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.
Click for Report details:Indonesia Real Estate Report Q4 2012