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Indonesia Real Estate Report Q1 2012
Business Monitor International, Dec 2011, Pages: 62
Indonesia Real Estate Report Q1 2012 provides industry professionals and strategists, corporate analysts, mining associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Indonesia's Real Estate industry.
Indonesia has a surging economy, growing urbanisation, relative political stability and strong savings and income growth. Consumer spending is growing, particularly from increasingly affluent sections of the population. This is a population that has doubled in 30 years, increasing the demand for property and providing a rapidly expanding labour force.
As a result of surging demand, the Indonesian property market is looking up. It is among the top 10 fastest-growing sectors in the economy in 2011 according to Jones Lang LaSalle and in spite of looming international economic problems - especially in the US and the eurozone - demand for real estate development in Indonesia is likely to remain strong over the medium to long term.
Office space demand is expected to grow, driven by economic growth and foreign direct investment (FDI). Businesses are expanding, upgrading and relocating. In the retail subsector, with ever-increasing consumer spending, demand will also continue to expand - especially from foreign retailers moving into the market. The industrial subsector will also continue to grow in most centres due to expanding manufacturing, as well as the potential for increases in productivity. Companies based in Korea and Taiwan are considering relocating factories from China to Indonesia.
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. It is not necessarily financial constraints that are acting as barriers to implementation but rather the regulatory environment and red tape. We remain confident, however, that with the support of public-private partnerships, fiscal policy will be conducive to infrastructure growth over the next few years. The government’s draft 2012 budget, released in August 2011, has allocated IDR168.1trn (US$19.67bn) for infrastructure spending by government institutions, up by 16% from the 2011 revised budget. However, some commentators believe that the budget still fails to prioritise the requirement for massive infrastructure expenditure.
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