JAKARTA (TheInsiderStories)—Indonesia’s residential property sector saw a slow growth rate last year despite rising optimism at the prospect of various incentives offered by the government a year earlier to boost development of low income mass housing.
However, many expect of an improvement of performance in 2018 as more of the government’s infrastructure projects complete, are expected to help ease access to some of the residential housing areas. Meanwhile, a joint effort from state-owned enterprises and the private sector to offer home loans for informal workers, may also help lift up sales.
So far, listed property developers are projecting stagnant sales this year. PT Ciputra Development Tbk (IDX: CTRA) for example, is targeting Rp 7.6 trillion (US$554.74 million) marketing sales in 2018, which is similar to last year’s achievement. Corporate Secretary Tulus Santoso said, as quoted by Kontan, the company sets a similar target to last year due to predictions of sluggish market in property sector this year.
He explained the sector will need to tap into the low-end consumers with disposable income of Rp1 million and highly depends on the housing loans to purchase property.
Ciputra has been developing residential property projects targeting low-end consumers in several locations, which include in Makassar (South Sulawesi), Cibubur (Jakarta), and Batam (Riau Island), to attract this particular consumers.
Another developer also eyeing on the same consumer segment. PT Sinarmas Land, is looking to make its property investment more liquid by easing buying procedures for its consumers.
Chief Executive Officer Strategic Development & Service Sinarmas Land Ishaq Chandra as quoted by Kontan, the company offers a program deal that will make easier payment for the buyers from April to June 2018.
The program includes 10 per cent discount of down payment subsidies for mortgage loans for apartments. It is offered only from ready stock and under construction apartment.
The total product value for this program actually reach Rp8.2 trillion, but the company stays on the lower sales target of Rp2.5 trillion.
The lower target puts because the company considers presidential election that usually decreases property sales by 30-40 per cent. But the company confidence the market will increase in the six months after the presidential election.
Last year, property stocks saw a decline despite the broader the Jakarta Composite Index (JCI) increased. According to the Indonesia Stock Exchange data, an index that tracks the property, real estate, and building construction-related stocks saw a 4.31 per cent decline in 2017, despite the JCI increased 19.99 per cent.
It means the performance of the property sectors did not improve although the Bank Indonesia lower the interest rate and slacken the loan to deposit ratio policy.
Country Head of Property business consultant Jones Lang LaSalle (JLL) Todd Lauchlan hopes the presidential election will not disturb the local and foreign investment in property. He said although there is no transaction in the first quarter of 2018, the investors are still quite positive about the property business in Indonesia.
Several investors from Japan, China, Hong Kong, and Singapore have consistently shown high interest in investing in Indonesia, especially residential and logistics sectors.
It happened in 2014 when the president elected president in line with the market hope but the property industry still plummeted. The property business in the election year usually decreases by 30-40 percent. Unstable political conditions make the market choose to hold business expansion, including property market.