Real estate in Indonesia shows stability in pricing
Real estate in Indonesia shows stability in the formation of prices. During 2020-2021, property values remained virtually unchanged.
During the pandemic, home prices declined about 0.1%, with a 0.7% decline in 2019 and a 0.17% decline in 2018. In all, values for properties in 14 major cities across the country have declined since 2016.
The pandemic has had the same impact on Indonesia’s real estate market as it has in other states. Sales volumes fell 31% at the end of 2020, and the first quarter saw a 43.2% decline.
During the pandemic due to quarantine restrictions, the housing construction segment nearly stopped. As a result, only 2,698 housing units were commissioned in the capital, Jakarta, in 2020, a drop of almost 73% from the previous period.
A square meter of housing in Jakarta now costs $2,600. A 120-square-meter apartment in the downtown area will cost $311,400. The rental rate for such apartments is $1,840 per month, based on this, the yield of such housing is about 7.1% per year.
Indonesia’s economy has been growing steadily for the past 20 years, but 2020 has changed everything. During this period, the decline is marked at 2.07%, which is quite serious compared to the increase of 5% in 2019. In order to stabilize the economy, the government allocated a package of over $53 billion. 107.3 million of this amount was allocated to the housing subsidy program. These measures should finance the purchase of 175 thousand new apartments and houses.
In 2021, the Indonesian economy showed a good pace of recovery and grew by 4.5%.
To stimulate the real estate market, the authorities have also made a change in the project, which regulates immigration. Whereas previously the document allowed foreigners who have real estate in the country and are pensioners, now the opportunity to obtain a residence permit can be people of any age. The main factor for this is property in the country.
In addition, the period of stay of foreigners who own real estate in Indonesia also increased, now it is 5 years, not 2 years, as it was before. At the same time, these people can get permanent residency, but only if their residence permit was extended several times.
In general, the real estate market in Indonesia shows good business activity, which will be observed in the short term.