The Greater Jakarta residential property market has remained strong amid the economic downturn of the Covid-19 health crisis, while the retail property market took a hard hit from repeated extensions and frequent changes to the government’s restrictive policies, says property consultancy Jones Lang LaSalle (JLL).
JLL said at a virtual press briefing on February 10 that the residential property market recorded a supply of 16,000 new houses last year, the highest since the consultancy started collecting data in 2017. Residential sales reached 13,000 houses with a sales rate of 72 per cent, higher than the 63 per cent rate for condominiums in Greater Jakarta.
The majority of houses sold last year fell within the 600 million to 1.3 billion rupiah ($43,000 to 93,000) price range, had two to three bedrooms and were located in the satellite city of Tangerang, Banten province.
JLL head of research Yunus Karim said developers with broad tracts of land shifted their focus to building residential homes, including by partnering with foreign developers.
“Landed houses have been [resilient to] the pandemic because Indonesia has socioeconomic potential that lures both domestic and foreign investors to develop landed houses here,” Yunus told February 10’s press briefing.
“This is also because buyers with usage intent, or end users, are more active than [buyers] with an intention to invest,” he added.
The public health emergency has negatively affected the domestic property market, with the latest Bank Indonesia survey showing that combined sales of small, medium and large houses slumped 30.93 per cent in the third quarter last year, a sharp contrast from third-quarter growth of 13.95 per cent recorded in 2019.
Respondents cited the prolonged health crisis and the government’s large-scale social restrictions (PSBB) as the primary deterrents to purchasing new homes.
The government recorded 8,776 new Covid-19 infections on February 10, bringing the nationwide tally to 1.18 million cases, even as it enforced the micro public activity restrictions (PPKM Mikro) from February 9-22.
The new policy is more lenient than the original PPKM, with one of the more significant changes being that it extends the operational hours for shopping malls and dine-in restaurant services by an additional two hours to 9pm.
Around 16 per cent of respondents cited high mortgage rates as a deterrent, although mortgage rates had fallen to 8.63 per cent the third quarter from 8.85 per cent in the second quarter.
The survey also showed that residential property prices grew at a slower rate of 1.51 per cent year-on-year in the third quarter, compared to 1.80 per cent growth in the same period in 2019. The central bank forecast growth of 1.29 per cent year-on-year for the fourth quarter of 2020.
Chairman Totok Lusida of Real Estate Indonesia (REI) on February 10 said the Greater Jakarta housing market was spurred by millennial and middle-class homebuyers, with some shifting from buying apartments due to coronavirus concerns.
“Homebuyers have been concerned since the Covid-19 outbreak . . . Using the same elevators, living in the same building,” Totok told The Jakarta Post in a phone interview. “But [apartment] managers have actually instilled the health [protocols]. So, I hope by the midterm this year, apartment [sales] will start returning to normal.”
Totok’s statement corresponds with a 2020 survey by real estate portals 99.co and Rumah123.com, both part of Singapore-based property marketplace 99 Group, which found that 76 per cent of respondents were still looking to purchase residential property.
One-quarter of respondents, the majority of who were Greater Jakarta millennials, were searching for houses in the 250-500 million rupiah and one-to-two billion rupiah price ranges.
In the commercial market, JLL said the health crisis caused a 34,000sqm contraction last year in the demand for Jakarta retail space. Correspondingly, the occupancy rate of retail property fell to 87 per cent last year from 90 per cent in 2019.
The consultancy forecast a further decline in occupancy rate to 86 per cent this year, as it expected the retail property market to become oversaturated.
Despite the Covid-19 restrictions, Jakarta’s retail property market saw 25,400sqm of new shopping centres last year, with the new supply of shopping centres forecast to reach around 130,000sqm this year.
“We are still seeing new stores opening in shopping centres,” said Yunus. “We expect the food and beverage, beauty and fast fashion sectors to remain active this year, while the entertainment industry may still need to wait for the situation to improve before resuming [full] operations.”
In manufacturing, Statistics Indonesia (BPS) data showed that the food and beverage industry grew 1.66 per cent year-on-year in the fourth quarter of 2020, while the textile and garment industry nosedived 10.49 per cent year-on-year in the same period.
According to Alphonzus Widjaja, who chairs the Indonesian Shopping Centers Association (Appbi), the shopping centre occupancy rate fell by 10 to 20 percentage points to reach between 70 per cent and 80 per cent, and hovered at that level until February 2021.
“In shopping centres, it is normal for tenants to come and go,” Alphonzus told the Post in a phone interview on February 10.
He explained that the decline had occurred because many tenants did not apply for an extension after their lease periods had expired, and some tenants even prematurely terminated their leases because of severe business impacts from the coronavirus-induced downturn.
“But there was a difference. In normal times before the pandemic, there were many successors if a tenant did not extend their lease. During the pandemic, there were almost none,” Alphonzus said.
THE JAKARTA POST/ASIA NEWS NETWORK