There are some industry observers predicting property and the Indonesian property industry has entered a phase of slowdown in the Year of the Horse. In Bali, there have been concerns raised in recent months about the rapid - and in some circumstances, ridiculous - price increases, delays in infrastructure, future oversupply, and the problem of environmental sustainability long term more serious that will most likely create volatility that could finally break longstanding growth trend of the island.
Analysts examine the overall growth prospects of the property sector in Indonesia as a whole in 2014 to the midst of an economic slowdown of expansion, tightening monetary policy, depreciation Rupiah and the uncertainties of the country on the parliamentary and presidential elections in the country in mid-2014. These issues should have a significant impact this year.
Although the slowdown prediction does not seem to be viewed pessimistically by real estate developers in the marketing of new products and to set high sales goals. One such company, PT megalopolis development, has set a target of 25 percent growth in 2014 and aims to aggressively market its new products. Fanny Setiati, megacities secretary general, said the optimistic estimate of the company is based on property sales which increased by over 50 percent in 2013 compared to 2012.
Where there is demand there is growth, and because of the continued strong demand for property in Indonesia? Four years of strong economic growth. In addition, demand for goods in Indonesia is driven by growing affluence and middle class more. emerging from the middle of the country and the medium to high end consumers may reach 184.5 million by 2020, according to forecasts by the Boston Consulting Group Inc. The increase in power and positive urban demographic buying patterns are designed to stimulate demand for goods. As the country develops a better and stronger economy with companies accelerating at a faster pace and the demand for real estate remains greater than supply, the bubble may still have more room to develop, although residential real estate, in particular, has been something of a puzzle. Indonesia has the world's fourth largest population of 245 million people. Despite strong economic growth and high levels of investment, factors that have hindered the growth of Indonesia's housing market are high mortgage interest rates, high costs of building materials, the tax rates high and bureaucracy in government.
With the release of the Indonesia Economic Quarterly in March 2013 by the World Bank, the central bank (Bank Indonesia) introduced measures to curb demand Indonesians for housing, particularly because it detects speculative buying in the real estate sector of the country. Some measures have been implemented, for example, the increase in the benchmark interest rate (BI Rate) of 175 basis points to 7.5 percent leading to rising mortgage interest rates, the progressive policy loan to value (LTV) ratios for a second home, and restrictions on withdrawal of requests for credit from home.
Despite governments and financial regulators to implement measures aimed at growing the property of Indonesia slowdown in 2014, the two Investors Service and Fitch Ratings Moody believe that credit profiles Indonesian property developers remain stable. Fitch says that Indonesian property developers (especially residential real estate) will book pre lower in 2014. This will limit the beginning of new real estate projects as presales are a common source of funds for construction. As such, companies can count on recurring revenues will have more opportunities for investment and business expansion. Recurring revenue is essentially income that is generated by rental of goods, such as shopping malls, hospitals and apartments.
Until now, most notice of major local banks, national developers and various consultants tend to minimize negative growth problems, while regulators in the country, such as Bank Indonesia and related ministries, continue to take a cautious approach as they monitor and evaluate the real estate sector. Global macroeconomic conditions are more robust and relatively free of any potential crisis. The most widely accepted view is that the real estate market in Indonesia will continue its positive trend, albeit slower, riding on the wave of economic growth, which should remain strong in the short to medium term. On this basis, it is expected that prices will continue to rise alongside the increase in demand and the purchasing power of the buyer. The market is not leading a bubble, but likely to remain on a sustainable growth path.
There is another factor that continues to play a role in the growth of the property market in Indonesia, which has been a controversial issue for Indonesians and foreigners; foreign ownership. With land titles (hak Milik) only legally available to Indonesian citizens, foreign ownership of land - objected in the Constitution - is a contentious issue for the government and international investors. A proposed change in the current laws on foreign ownership property, which would extend a lease period for a full 70 years, as opposed to the current 25 years followed by subsequent renewals, was expected at the end of 2010, but this change is still coming adopted by the government. This change has met with widespread opposition, particularly in Bali. While the adoption of this law would be a welcome change, investors - and expatriates who wish to call Indonesia home - will always find coming up short compared to regulations in other countries in the region such as Malaysia and Singapore
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