Surabaya’s outlook for demand in both apartments and hotels is looking likely to improve after both sectors suffered stagnation, and challenges in the last quarter. The supply in both sectors is also set to increase with promising influences including the economy and future events.

With a subdued apartment market in Surabaya, reflected by limited transactions in both strata-title and apartments for lease markets, investors remain cautious. The Colliers H1 2017 Surabaya Apartment Report suggests the trend of low sales activity in new projects, and slow sales in May-June was possibly affected by new school year and Eid al-Fitr festivities, marking the end of the Ramadan. Household budgets are being squeezed resulting in the increase in longer-term stay apartment-like hotels, causing serviced apartments to perform poorly.

Apartments forecast at a glance:

• Supply Strata-title stock increased by 1,224 units to a total of 28,887 units as of H1 2017. 33,414 new apartment units expected to be completed in the next four years.
• Demand Likely to improve in the next half-year, as macroeconomic situation improves in line with controlled inflation and expectations of rising commodity prices. 
• Price Projected to pick up by more than 4% HOH, with improved outlook in the second half-year of 2017.
• Rent Pointing to stability, as multinational companies keep housing allowances low, shifting leasing demand away from international-branded serviced apartments.

In the hotel sector’s last period, according to The Colliers H1 2017 Surabaya Hotel Report, the challenging hotel market situation in Surabaya will continue up to the first half of 2017. This year’s first semester shows supply was controlled with no additional hotel rooms, but the hotel market in Surabaya is yet to perform better than last year.

Hotel Forecast at a glance:

• Supply Additional 1,705 new hotel rooms comprising 566 rooms in four 3-star hotels by end of 2017 and 1,139 rooms in six 4-star hotels. Four-star hotels continue to dominate the overall number of hotel rooms with 5,505 rooms, mostly located in Central Surabaya, operated by Archipelago International, Accor and Swiss-Belhotel, and the 3-star hotels mainly run by local chains plus 1,825 more rooms from 10 projects anticipated in the pipeline from 2018 to 2019. 
• Performance Still below the last three years, in occupancy and hotel rate. Surabaya hotel performance is expected to be relatively stable ahead, with several events planned to be held.

For more detailed market information email Ferry Salanto from Colliers International via the contact details below​.

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