According to Colliers Q3 2017 Jakarta Property Market Report, Jakarta’s apartment market is anticipated to remain lacklustre for the rest of 2017 on the back of persistently weak market sentiment and continued influx of new apartment projects. Several newly launched projects demonstrated a brisk pre-sales performance. This generally occurred for a short-term period only, and thus it is too early to consider this as a sign of market recovery. Another prevailing trend that may affect current and future inventory growth is the rise of overseas developers and investors, particularly from major Asian countries. These business entities usually partner up with local players in developing apartment projects. Some of these developers are quite aggressive and quick to execute new projects, usually targeting the middle-lower segment.

At a glance:

• Demand appears set to pick up in 2018
• Vacancy rates dipped but are anticipated to be reduced by 25% in 2018
• Rent is projected to modestly increase by 3 to 5% in 2018
• Apartment prices are anticipated to grow in 2018

Demand
The average take-up rate in 2017 is anticipated to stabilise at 86-87% and start to pick up in 2018 to 88-90%, assuming the political condition is stable and the GDP will accelerate to a healthier level beyond 5.3%.

Supply
Colliers expects a total annual supply of 15,292 Jakarta apartment units in 2017, which is 28% lower than our projection earlier in the year. Later in 2018, there will be around 34,043 units that are scheduled for completion during the year and another 9,509 units to enter the market in 2019.

Vacancy Rate
Vacancy rates for apartments for lease dipped from 29.8% to 28.3% this quarter. In 2018, Colliers anticipates an increasing number of expatriates working on project-based infrastructure works and other projects related to the Asian Games 2018, which will help reduce vacancy by at least 25%.

Rent
With a substantial amount of serviced apartment projects in the pipeline, vacancy rate would potentially rise over the next few years. In this competitive rental market, some landlords and local operators have to adjust their rental rates lower in order to entice potential tenants. Rent is projected to modestly increase by 3 to 5% in 2018.

Price
Apartment price is anticipated to grow by 4.5- 5.0% by the end of 2017 and will rise to 6-8% in 2018 on the back of better economic projection, which in turn will improve sales performance.

Conclusion
Colliers concludes despite the encouraging pre-sales result of some newly launched projects, they are of the view that overall apartment demand has not picked up yet. Opportunistic buyers generally characterise pre-sales activities of newly launched projects, making an impressive sales record only at the beginning. The initial stage of products, as typically offered, lures buyers who wish to make investments, notably because developers come up with compelling discounts and bonuses, as well as provide payment flexibility. Over time, as more construction works progress, prices are inevitably raised and sales start to diminish. Furthermore, at the same time, the market continues to see new projects coming on stream, thereby heightening competition amongst new projects. Given the limited number of transactions, Colliers expects to see the apartment market continue to subdue, at least in the remainder of 2017.

For more detailed information, click here to download the Colliers Q3 2017 Jakarta Property Market Report.

For specific questions about the report, email or phone Ferry Salanto, Colliers Senior Associate Director, Research via the contact details below.

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