Jakarta has ranked 15th in Pricewaterhouse Cooper’s list of the top investment markets in the Asia Pacific.

The city was also ranked 15th for development by the company, which evaluated markets in the region as part of its Emerging Trends in Real Estate Asia Pacific 2019 report.

But Colliers International Capital Markets and Investments Director Stephen Atherton told WILLIAMS MEDIA the city is well on its way to being included in the top ten.

"Property developers just need to push through the current overbuilt market conditions and get through April's presidential election, at which time the investor sentiment should improve," he said.

"The investment market will likely continue to remain slow in terms of transaction volume, due to the high price expectation of local owners and the negative spread on cost of borrowing to investment yield."

Related Reading: Will investment in infrastructure transform Jakarta's property prices?

According to PWC, record supply in Jakarta’s office sector was having a “strongly negative impact” on its market as a whole.

“A fourth year of record new supply in the Jakarta office sector continues to depress fundamentals,” the report states.

“As a result, Jakarta is the only major city in the Asia Pacific to see significant declines in capital values and rents in the year to mid-2018, continuing a trend in place since the beginning of 2015.”

Click here to read the PWC Emerging Trends in Real Estate Asia Pacific 2019 report

Mr Atherton said the city's planned transit-oriented developments could lead to a supply change.

"The completion of the first phase of the Jakarta subway line (April 2019) will be transformational and we expect the value of TOD projects, single purpose and mixed-use, to have significantly higher demand, rental and capital values," he said.

"To a lesser degree, this will also be true of the new TOD projects completed along the new LRT line running from the suburbs into the city center, which will be completed by early 2020."

Despite office vacancies approaching 35 per cent midway through 2018 (JLL), PWC says private private-equity investors continue to show interest in Indonesia, with many “buying bulk lots of unsold residential stock that developers continue to hold on their books with a view to converting it to serviced apartments”.

Related Reading: LRT and MRT development projects to push infrastructure industry in Q3 - Colliers

Mr Atherton said there could be a shift in focus for investors in the coming years.

"The serviced apartment sector is fairly mature in the CBD area, but is poised to grow around the next wave of locations with unmet demand in areas like South Jakarta, near the international schools, with the second largest office market and high-end housing neighborhoods and shopping," he said.

According to the Pricewaterhouse Cooper report, there also remains significant foreign interest in Jakarta’s logistics sector, which has benefited from the growth of e-commerce and the structural shortage of modern logistics space.

This was seen in 2016 when Singapore sovereign wealth fund GIC teamed up with Indonesia's PT Mega Manunggal Property (MMP) to develop a portfolio of quality logistics warehouses. 

LOGOS is another logistics developer with operations in Australia, China, India, Indonesia and Singapore, which has developed its first Jakarta logistics center.

Mr Atherton said Jakarta's high industrial rates were preventing further growth, a trend that is also mentioned in the report.

"Many other pan-Asian and global logistics players have studied the Greater Jakarta industrial & logistics market, but have found the economics to develop new projects are challenging due to the high cost of industrial land combined with modest rentals," he said.

Sources: Pricewaterhouse Coopers, Colliers International

This article was previously published on Gapura Jakarta

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