The property sector of Indonesia remains somewhat depressed. This is reflected by sluggish demand for house ownership credit (in Indonesian: kredit pemilikan rumah, abbreviated as KPR) and apartment ownership credit (kredit pemilikan apartment, or KPA) so far this year. According to data from Indonesia's central bank (Bank Indonesia) KPR and KPA credit disbursement growth stood at 7.7 percent on a year-on-year (y/y) basis in May 2017, slowing from a 7.8 percent (y/y) growth pace in the preceding month.

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Real estate development company Sinarmas Land Ltd, a unit within the Sinar Mas Group, purchased a big office building in Central London for the price of nearly USD $269 million. Sinar Mas Land Ltd, headquartered and listed in Singapore, is engaged in the property business through its operations in primarily Indonesia, China, Malaysia and Singapore.

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Investment in homestays as well as the value of houses in Yogyakarta have risen significantly after local authorities implemented a moratorium on new hotel development (effective since Jan. 1, 2014 and will last until at least 1 Jan. 2018). The city and province of Yogyakarta, located in the center of Indonesia's Java island, are important tourist destinations. Moreover the city of Yogyakarta is a key student city. Therefore, demand for houses in Yogya (used for the homestay or student accommodation business) has grown.

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The performance of those Indonesian property companies and industrial estate managers that are listed on the Indonesia Stock Exchange is not very encouraging so far this year. When we take a look at the corporate earnings of 17 listed property firm and industrial estate managers, then we see a combined 37.6 percent year-on-year (y/y) fall in net profit in the first quarter of 2017 (from their net profit in the same quarter one year ago). Meanwhile, their combined revenue fell 0.6 percent (y/y) in Q1-2017.

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Although Indonesia's central bank (Bank Indonesia) lowered its benchmark interest rate by 150 basis points in 2016 and eased the nation's loan-to-value (LTV) ratio, implying it should be easier for Indonesian consumers to buy a house or apartment, the disbursement of house ownership credit (kredit pemilikan rumah, abbreviated as KPR) and apartment ownership credit (kredit pemilikan apartment, KPA) in Indonesia remains bleak so far in 2017.

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After the ending of Indonesia's tax amnesty program, property players in Southeast Asia's largest economy remain optimistic that inflows of fresh funds - originating from the tax amnesty program - will give a boost to Indonesian property sector in the second half of 2017. This should then cause some momentum, meaning property developers dare to kick-start new projects. Considering weak demand for property in Indonesia over the past couple of years, many local property developers have been postponing projects.

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Colliers International Indonesia, a leading commercial real estate consultancy, expects to see an improvement in the residential property sector of Indonesia in 2017, particularly in the capital city of Jakarta, after this sector experienced two weak years previously. In terms of sales and price increases, apartments are most the promising property object this year according to analysts.

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Sofyan Djalil, Indonesian Minister of Agrarian Affairs and Spatial Planning, says the progressive tax on land that is deemed idle will not disturb the investment climate of Indonesia because industrial estates and land that has a clear development purpose are exempted from this tax (this includes land destined for property development projects). Through the progressive land tax the government wants to combat speculative land buying, something that has become a problematic phenomenon in Indonesia.

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Indonesia's Public Works & Housing is hopeful that the government's One Million Houses program will be more successful in 2017 supported by the 13th economic policy package that aims to ease red tape surrounding the construction of low-cost housing for the poorer segments of Indonesian society as well as high demand for property due to improving purchasing power amid low inflation and accelerating economic growth.

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The Indonesian government revised the price mechanism for property that can be bought by expats under the "right-of-use" category. Through Agrarian and Spatial Planning Affairs/National Land Agency (BPN) Regulation No. 29/2016 on Procedures for the Granting, Relinquishment and Assignment of Ownership Rights over Residential Homes or Housing by Foreigners Resident in Indonesia, it changed a couple of the minimum prices set on property (divided by region and the type of property).

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Just like most other sectors (with the notable exceptions of the digital economy and telecommunications sector) the property sector of Indonesia was heavily affected by the COVID-19 crisis in 2020-2021. Now this crisis has passed, it is interesting to take a look at the state of Indonesia’s property sector.

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At its latest monetary policy meeting, which ended on 18 February 2021, the central bank of Indonesia (Bank Indonesia) decided to cut its benchmark interest rate (BI 7-Day Reverse Repo Rate), again, by 25 basis points (bps) to 3.50 percent, touching a historically low level.

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Those consumers and investors who purchased one or more apartment units in the Meikarta megacity project in Bekasi (West Java) are currently facing uncertain times. A new corruption scandal has put the future of the Meikarta project in jeopardy and therefore those who have already bought a Meikarta apartment fear that their money and apartment unit is lost. Those who are still making monthly mortgage payments to the bank, are confused whether they need to continue these payments (hence risking losing more money) or stop the monthly payment.

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The need for decent housing with affordable prices has been rising lately. Unfortunately, getting a comfortable and cheap house is not an easy matter. Besides having a lack of property construction (thus resulting in the nation's housing backlog), it is often difficult to find accurate information about property products.

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One of Indonesia's biggest diversified conglomerates, the Lippo Group, topped off two apartment towers for its ambitious and controversial Meikarta megaproject on Sunday (29/10). The topping off ceremony is a sign that - despite some legal uncertainties - the project will continue as planned and not face the same fate as the land reclamation project in the bay off the coast of North Jakarta.

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Those who have business interests in Panama and seek their dream house in the beautiful hills of this Central American country, or those who search an interesting investment object in Panama's property sector, now have a great opportunity at their disposal. One of the most beautiful luxury villas in Panama is now for sale. Insiders in Panama's property market call this "a unique object".

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Ciputra Development, one of Indonesia's leading property companies with 75 projects spread across 33 cities, is increasingly focused on diversifying its portfolio outside the island of Java. The company has expanded to Sumatra, Kalimantan and Sulawesi as it wants to "bet on more than one horse" to improve its corporate earnings.

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For Indonesian cement producers it is vital to maintain their market share amid ongoing difficult times. With Indonesia's total installed annual cement production capacity now being around 100 million tons, while domestic demand is only expected to reach 65 million in 2017, cement players are facing weak prices amid a big oversupply, while foreign demand for Indonesian cement is yet to grow. Meanwhile, due to the arrival of various new cement players in Indonesia in recent years, competition for market share has become increasingly fierce.

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So far East Jakarta has been left behind in terms of property development in the capital city of Indonesia. For many decades Central and South Jakarta have seen the construction of many residential property and office tower projects. Recently, West Jakarta experienced a major surge in property development. Few investors, however, dared to develop projects in East Jakarta as demand from the (upper) middle class and elite for property or offices in East Jakarta has been low.

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The tax amnesty program of Indonesia is yet to have an impact on Indonesia's property sector. Earlier, analysts and stakeholders expected part of the asset repatriations into Indonesia (under the government's tax amnesty program) to flow to property, either property ownership or property development projects. Although tax declarations and additional government revenue under the amnesty program were a success, the repatriation of assets that were stashed overseas has been weak. However, some stakeholders are optimistic that repatriated funds will flow to Indonesia's residential property in Q2-2017.

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