Real estate in Indonesia - statistics & facts
Indonesia’s real estate market has experienced significant growth in the past decades. The sector contributed around 2.4 percent to Indonesia’s GDP in 2023, exceeding the contribution from accommodation and food service activities in the country. As property prices and demand rise due to rapid population growth and high urbanization, Indonesia’s real estate market is currently one of the strongest sectors in the region.
Indonesia’s largest real estate companies, such as PT Lippo Karawaci, PT Bumi Serpong Damai, and PT Ciputra Development have seen rising sales in the residential houses and apartments sectors over the past few years. This indicates that the demand for these properties in Indonesia is still high, even during the pandemic crisis. However, property supplies are still relatively low. There is still much room for further developments to fulfill the country’s demand for residential and commercial real estate.
Despite the ongoing efforts, challenges remain. Indonesia’s growing housing backlog in recent years primarily affected low-income households. Additionally, a substantial portion of Indonesians are engaged in informal employment, making it more difficult to secure bank loans for purchasing a house. On the other hand, most residential property developers in Indonesia rely on internal funds to finance their projects. Given the soaring land prices, this can place small developers at a disadvantage, consequently limiting the housing supply across the country.
In the face of rising prices, limited affordable land, and a persisting house backlog, continued investments and demand across various sectors are expected to keep the strong growth of Indonesia’s real estate market in the years to come.
Untapped opportunities in Indonesia’s real estate market
Average land prices in Indonesia have been growing across the nation. Prices continue to be highest in Jakarta, the economic center of Indonesia, with an average land price in its industrial areas reaching over 5.7 million Indonesian rupiah per square meter. Furthermore, the landed residential property prices were almost three times higher, at close to 16 million Indonesian rupiah per square meter. Meanwhile, Denpasar, Bali’s major hub, recorded the highest price index growth for commercial property among other big cities in Indonesia. The robust growth of tourism in Bali has significantly influenced the real estate market in recent years with increasing demand for accommodations, including luxury properties.Indonesia’s largest real estate companies, such as PT Lippo Karawaci, PT Bumi Serpong Damai, and PT Ciputra Development have seen rising sales in the residential houses and apartments sectors over the past few years. This indicates that the demand for these properties in Indonesia is still high, even during the pandemic crisis. However, property supplies are still relatively low. There is still much room for further developments to fulfill the country’s demand for residential and commercial real estate.
Indonesia’s efforts and challenges to expand the sector
To meet the rising property demand and lower its housing backlog, the Indonesian government has introduced several measures to expand the sector, such as decreasing key interest rates, providing housing financing liquidity facility, providing tax incentives to Indonesian real estate investment trusts, and increasing the loan-to-value ratios. The government also launched the "One Million Houses" program (Program Sejuta Rumah), aiming to build one million houses each year, and increased the price threshold for luxury property taxes to encourage home buying in Indonesia.Despite the ongoing efforts, challenges remain. Indonesia’s growing housing backlog in recent years primarily affected low-income households. Additionally, a substantial portion of Indonesians are engaged in informal employment, making it more difficult to secure bank loans for purchasing a house. On the other hand, most residential property developers in Indonesia rely on internal funds to finance their projects. Given the soaring land prices, this can place small developers at a disadvantage, consequently limiting the housing supply across the country.
In the face of rising prices, limited affordable land, and a persisting house backlog, continued investments and demand across various sectors are expected to keep the strong growth of Indonesia’s real estate market in the years to come.
