The evolving landscape: Adapting to change in Jakarta’s real estate market

The industry is recovering with improving economic conditions

The Jakarta real estate market is expected to recover in 2023 following improvements seen in 2022. JLL reported that the city’s government lifted activity restrictions at the end of December 2022, which is anticipated to support economic growth. Economists project a positive economic outlook for Indonesia with healthy growth expected, as benchmark interest rates stabilise and inflation rates decrease. 

The exchange rates of the Indonesian Rupiah are also expected to remain stable. Infrastructure development, including the completion of the first Greater Jakarta Light Rail Transit (LRT), remains a priority for the government. Modern logistics warehouses and landed residential properties continue to attract occupiers. Landed residential developers are expected to launch new products due to strong demand, despite the end of government tax incentives. 

Data centres are also on the rise. Prime malls are experiencing low vacancy rates and have a solid demand base. Limited prime shopping mall supply will support healthy occupancy rates. Leasing demand in the office market will be driven by relocation, cost-saving opportunities, and sustainability requirements. The downsizing trend continues as tenants adopt workplace strategies. Mixed-use developments near public transportation are likely to receive a better response in the slow condominium market. Overall, there is optimism among clients and experts for the recovery of the Jakarta real estate market in 2023.

Related: Capital gains: Indonesia’s economic growth and real estate boom fuel development

According to Dr. Aswin Rahadi on Linked In, Indonesia’s housing market has experienced significant growth in recent years, but several factors may shape its future. The high cost of housing, the reluctance of Generation Z and above to buy homes, the rise of hybrid and remote working, and the inclination of younger generations to seek mobility all play a role. The high demand for housing in urban areas has driven up prices, making homeownership unaffordable for many Indonesians with lower to middle incomes. Moreover, younger generations prefer renting over buying due to high costs and changing attitudes towards homeownership. 

The trend towards remote and hybrid work could reduce the demand for urban office spaces, potentially altering the housing market as people seek more affordable and higher quality of life in rural areas. The mobility of younger generations, influenced by digital nomadism and remote work, may increase the demand for short-term rentals rather than long-term ownership. 

Real estate developers should consider these changing needs and explore flexible and affordable housing models like co-living, micro-living, and serviced apartments. Additionally, integrating smart home technology can attract tech-savvy younger buyers. Adaptability will be crucial for success in Indonesia’s housing market.

The Property Report editors wrote this article. For more information, email: [email protected].