Jakarta is balancing its growth and capital relocation dynamics, presidential elections, and the strategic moves of influential tycoons
Indonesia’s real estate sector is undergoing rapid changes, with the Jakarta property market expected to witness a substantial five percent growth in 2024. Hendy Musa on LinkedIn noted that the city’s thriving real estate market is attributed to a robust economy, urbanisation, and an expanding middle class. Residential properties, especially apartments and condominiums in strategic urban areas, are in high demand, alongside continued interest in landed properties for those seeking spacious living options.
However, a significant transformation looms as the Indonesian government plans to relocate the capital city from Jakarta to East Kalimantan, particularly Balikpapan. This move is aimed at addressing Jakarta’s congestion and environmental challenges while fostering development in other regions. The capital relocation presents both opportunities and challenges for the real estate market, with potential shifts in demand and property values in Jakarta and new prospects arising in East Kalimantan.
The government’s decision to move the capital has implications for the real estate sector, creating opportunities for property developers in East Kalimantan while requiring close monitoring and adaptation of strategies in Jakarta.
Looking ahead to 2024, several predictions emerge. According to Colliers, Jakarta’s property market is expected to remain resilient despite the capital relocation, given its status as a key economic centre. East Kalimantan is poised for rapid development, offering new real estate investment opportunities. Investors may diversify portfolios by including properties in both Jakarta and East Kalimantan to mitigate market fluctuations. Infrastructure projects in both regions will drive growth in commercial and residential real estate ventures, and the emergence of the new capital will stimulate demand for transportation and mobility solutions, influencing property values.
Forbes reported that the impending presidential election introduces an element of uncertainty, historically leading to a slowdown in the real estate market approximately ten months before the event. Despite the slowdown, property prices generally do not decline, and the market regains activity after the election.
Tycoons in Indonesia, such as the Widjaja family’s Bumi Serpong Damai and Alexander Tedja’s Pakuwon Jati, are set to invest significantly in real estate projects despite high interest rates and the approaching election, buoyed by government incentives like VAT reductions. The government’s VAT incentives have positively impacted demand for housing projects, contributing to an optimistic outlook for the real estate business in 2024. However, expectations suggest a potential slowdown in property sales during the election period as both developers and buyers adopt a wait-and-see approach. High-interest rates could further discourage purchases, depending on how banks respond.
The Property Report editors wrote this article. For more information, email: [email protected].
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