Residential Real Estate - Indonesia

Indonesia

The Residential Real Estate market market in Indonesia is projected to reach a value of US$7.85tn by 2024.
It is expected to exhibit an annual growth rate of 1.24% from 2024 to 2029, leading to a market volume of US$8.35tn by 2029.
In comparison to other countries, China is anticipated to generate the highest value in the Real Estate market, with a projected worth of US$112.9tn in 2024.
The demand for luxury residential properties in Indonesia is witnessing a significant surge due to the country's growing affluent class.

Key regions: Europe, Brazil, France, Asia, United States

Market

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Analyst Opinion

The Residential Real Estate market in Indonesia has been experiencing significant growth in recent years.

Customer preferences: Indonesian customers have shown a strong preference for residential properties, particularly in urban areas. This can be attributed to the increasing urbanization in the country, with more people moving to cities in search of better job opportunities and a higher standard of living. Additionally, there is a growing middle class in Indonesia that has the financial means to invest in residential properties. These customers are often looking for modern and well-designed homes with amenities such as swimming pools, gyms, and green spaces.

Trends in the market: One of the key trends in the Indonesian residential real estate market is the development of integrated townships. These townships offer a mix of residential, commercial, and recreational facilities, creating self-contained communities. This trend is driven by the desire for convenience and a holistic lifestyle among customers. Integrated townships often include shopping malls, schools, hospitals, and other amenities, reducing the need for residents to travel long distances for their daily needs. Another trend in the market is the increasing popularity of high-rise condominiums. This is particularly evident in major cities such as Jakarta and Surabaya, where land availability is limited. High-rise condominiums offer a solution to the space constraints in these cities, providing vertical living options. These properties often come with modern facilities and are located in prime areas, making them attractive to both investors and end-users.

Local special circumstances: Indonesia's archipelagic geography presents unique challenges and opportunities in the residential real estate market. The country consists of thousands of islands, each with its own property market dynamics. While the major cities like Jakarta and Surabaya have a high demand for residential properties, the market in smaller cities and rural areas may be less developed. Infrastructure development and connectivity play a crucial role in attracting investment and driving growth in these areas.

Underlying macroeconomic factors: Indonesia's strong economic growth and stable political environment have contributed to the development of the residential real estate market. The country has experienced a steady increase in GDP and per capita income, leading to a rise in purchasing power. Additionally, low interest rates and favorable government policies have made it easier for individuals to access mortgage financing, further stimulating demand for residential properties. In conclusion, the residential real estate market in Indonesia is experiencing growth due to customer preferences for urban living, the development of integrated townships, and the popularity of high-rise condominiums. The country's unique geography and underlying macroeconomic factors also play a significant role in shaping the market dynamics. With continued economic growth and infrastructure development, the residential real estate market in Indonesia is expected to further expand in the coming years.

Methodology

Data coverage:

Figures are based on total and average value of residential real estate, residential estate transactions and leases.

Modeling approach:

Market size is determined by a combined top-down and bottom-up approach. We use national statistics, international organizations, and industry associations to analyze the markets. To estimate the market size for each country individually, we use relevant key market indicators and data from country specific industry associations such as GDP, price level index, household wealth, household size, number of renter and owner households, housing consumer spending per capita.

Forecasts:

We use a variety of forecasting techniques, depending on the behavior of the market, for instance, exponential trend smoothing. The main drivers are GDP per capita, population, number of renter and owner households, price level index, housing consumer spending per capita.

Additional Notes:

Data is modeled using current exchange rates. The market is updated twice per year in case market dynamics change. The impacts of the Russia-Ukraine war are considered at a country-specific level.