Indonesia is set to become a new economic powerhouse in Southeast Asia, luring more investors from overseas.
Increasingly more foreign buyers, especially from China, have spotted investment opportunities in Indonesia’s real estate market. I believe that Indonesia will become increasingly interesting once we see more regulatory changes to foreign ownership of property.
Having said that, you must understand how healthy the market is before making any investments. In this article, we explain how Indonesia’s property market has performed the past years and what my predictions are for 2019.
Indonesia’s Property Market in Previous Years
Indonesia’s property market has slowed down in the past years after experiencing a sharp growth in 2012. The Federal Reserve Bank of St. Louis has an illustrative graph showing the price changes.
As shown, the average price increase has slipped from 14% in 2013, down to around 3% in 2017 and 2018. In 2019, the average price increase was even lower and around 2.5% in the second quarter.
There are four main reasons for this decline:
- Political uncertainty
- Lower occupancy rates
- Introduction of a new luxury property tax
- A drop in GDP per capita between 2012 and 2015
The GDP per capita was USD 3,680 in 2012 and decreased to USD 3,330 by 2015. The slowing economy was a main contributor, which resulted in a reduced purchasing power among the middle- and upper-middle class.
The GDP per capita started to increase again after 2015 and was around USD 3,487 in 2017. Continue reading Indonesia Property Market Outlook 2020: A Complete Overview