Jakarta's property market thrives despite global uncertainty

Indonesia's economy maintained a healthy growth of 5.0% in 2024, despite global economic uncertainties. Foreign direct investment continued its upward trend, increasing by 20% year-on-year, with manufacturing as the largest contributing sector. 2024 also marked a significant milestone with the completion of the Cimanggis-Cibitung Toll Road, connecting the Jakarta Outer Ring Road 2 and enhancing connectivity throughout the Greater Jakarta. Additionally, September 2024 witnessed the groundbreaking ceremonies for two major mass transit projects: the Jakarta MRT West-East line and the Bali Light Rail Transit (LRT) system.

The Greater Jakarta property market demonstrated resilience across all sectors in 2024. Average office occupancy for all grades remained steady at around 70%. Grade A office buildings recorded rental increases in Q3 for the first time since mid-2015—a trend that continued into Q4. The retail sector remained stable, with strong activity from F&B, beauty, and variety stores. Condominium buyers generally remained cautious, responding more positively to projects nearing completion. Logistics warehouse rents remained stable, supported by healthy demand. Hotels attracted investors due to robust tourism and anticipated value appreciation.

The office market is likely to continue benefiting from the ongoing 'flight-to-quality' trend, with no new supply expected, leading to stable occupancy and rents. Meanwhile, the retail sector, particularly prime malls, is projected to remain robust with new supply entering the market. Jakarta continues to attract numerous global brands, with newcomers and established players actively expanding their presence in the city's prime shopping malls.

Condominium buyers continue to prefer projects in prime locations with limited competition, as well as those within mixed-use developments offering connectivity to public transport. Concurrently, end-user demand for properties below IDR 2 billion is expected to remain active in the landed housing sector. The demand is likely to be further bolstered by the extended VAT incentive. The policy provides 100% VAT coverage for residential purchases below IDR 2 billion until June 2025, followed by 50% coverage until December 2025.

The modern logistics warehouse market may face new supply pressure, particularly in eastern Greater Jakarta. Nevertheless, demand is expected to remain stable, driven significantly by third-party logistics (3PLs). Industrial land is likely to continue drawing interest, benefiting from the China+1 strategy, which offers businesses alternative locations outside China. Additionally, the government's efforts to build an EV ecosystem should continue to attract businesses to the country.

The scarcity of new luxury hotel rooms in Jakarta for the coming year is expected to support their trading performance. However, recent government budget cuts may impact the broader hospitality industry.

Bank Indonesia, the World Bank, and the IMF forecast a stable economic growth trajectory of around 5.1% in 2025. With a new cabinet in place, the market expects the new administration will implement measures to boost economic growth. Indonesia's real estate market remains fundamentally sound, with Jakarta leading the way in offering diverse and resilient property opportunities across various sectors.