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Market Outlook 2018: Property Sector

Updated: Oct 3, 2018

Promising residential prospects

Exhibit 80: Indonesia real estate and total foreign direct investment

Indonesian real estate continues to draw in foreign investment

Indonesian property remains attractive with influx of Foreign Direct Investment (FDI) in real estate sector increased by 22% YoY and reached USD2.04 bn in 9M17. The rise in real estate FDI outpaced the total FDI growth which only improved by 11% YoY to USD23.88 bn. Up to 9M17, the contribution of real estate FDI to total FDI up by 72 bps to 8.5% from similar period in 2016. Source: CEIC

Indonesia’s ongoing massive infrastructure development had attracted overseas developer groups from Asian countries such as Japan and China. Local property developer such as BSDE, ASRI and BEST have already benefited from the inflow through the establishment of JVs with several foreign developers. We believe the situation will improve further as we forecast Indonesian economic growth of 5.4% in 2018.   

Promising residential prospects

The residential property market is healthier than other subsectors as the growth in house price was more evidence and sustainable at 3.2% in 2Q17 and according to BI prediction will reach 4.0% in 3Q17. For 2017, evidence from leading developers points to quite a robust year. BSDE is targeting sales growth of 16% while ASRI is aiming for growth of 48%. Both companies appear optimistic to meet their targets. But for overall market, we expect moderate marketing sales growth of around 10-20% in 2018 as historically, growth has never sustained at 30% for more than a year albeit the base of comparison is lower. Source: BI


Exhibit 82: Indonesia’s house price changes


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