Jakarta's real estate: A peek into 2024
Post-pandemic economic recovery guides Jakarta's real estate market with prudent expectations for 2024.
Indonesia has witnessed a revival in its economic growth post-pandemic, as 2022 GDP growth soared to a 5.3% and healthy growth continued for the first nine months in 2023. This uptick has stirred activity in the Greater Jakarta property sector throughout 2023. This year also saw the launch of two notable public transit projects: Greater Jakarta's LRT and the Jakarta-Bandung High-Speed Train.
Office leasing activities improved throughout the year, especially within Grade A buildings. On the other hand, no new shopping mall projects were completed, resulting in limited retail space due to the high occupancy rate. Meanwhile, condominium sales remained subdued as only a few new projects were launched.
Modern logistics warehouses and landed residential properties continued recent market trends and maintained positive demand. Meanwhile, improved regional and worldwide air travel connectivity led to more international visits to Jakarta, benefiting hotel occupancy rates and the average room rates.
As we move forward into 2024, Indonesia enters a politically significant year. Historically, businesses, including the property market, have tended to take a watchful stance leading up to the general election. Yet, as of Q3-2023, activities across all property sectors remain relatively buoyant.
Bearing cautious hopes for post-pandemic recovery
The government maintains optimistic on economic growth prospects in 2024. Focused infrastructure development is still at the top of their agenda, likely stimulating progress in the property sectors.
Amid gradually improving demand and the new supply decrease forecast, the Grade A office market is expected to continue benefiting from the 'flight-to-quality' trend, which bolsters the occupancy rate of newer and good quality buildings. Meanwhile, the retail property sector—specifically prime malls—is anticipated to remain robust, fuelled primarily by the F&B, fast fashion, beauty, and entertainment sectors. However, the upcoming supply might slightly pressure occupancy rates.
Aside from some concerns over buyers’ affordability, condominium projects in prime locations with limited competition are anticipated to receive a stronger market response. This prediction also extends to those within mixed-use developments that offer the convenience of proximity to public transportation despite the overall subdued demand. The landed housing sector is expected to retain its resilience boosted by end-user buyers. The government's recent announcement of a VAT waiver on completed or nearly-finished residential purchases until the end of 2024 is expected to stimulate demand, echoing the trend observed in 2021 and 2022.
Looking at the modern logistics warehouse market, competition may increase due to a new influx of supply, majorly in the eastern region of Greater Jakarta. However, continued sturdy demand is anticipated, particularly from third-party logistics (3PLs). As the election approaches, occupancy rates will likely surge as hotels leverage the increased demand from political activities. Besides, trading performance should see improvement, mainly driven by the anticipated rise in outbound tourism from Mainland China.
During the second half of 2023, JLL Indonesia has been invited to present the Jakarta market at international events. This exemplifies that Indonesia continues to pique the interest of developers/investors due to its socio-economic potential and improving infrastructure, along with the government easing foreign ownership of residential products.
In short, we believe that exciting opportunities lie ahead for Indonesia's real estate market.