Thursday 29 January 2015

Roaring Indonesia: Property Industry to Grow In 2015 on Rising Middle Class and Infrastructure Spending

The worldwide house price boom is continuing as property markets outside Asia is growing more rapidly than earlier. Global Property Guide’s latest report has unveiled that the housing prices in most of Asia continued to grow in Q3/2014, however at a slower pace.
Ten Asian markets including the Philippines, Indonesia, South Korea, Vietnam, Singapore, China (Beijing), Taiwan, Hong Kong, Thailand and Japan (Tokyo), where eight of these experienced small surges in house prices during the year to Q3/2014. China reduced significantly by 3.83% in the period, while Singapore skid 4.79%. Global Property Guide reports that governments in Asia are imposing cooling measures to avoid a repeat of the past as many housing markets are overvalued.

As much as 15 to 20%, property prices are expected to increase in 2015. As this in in relation to increases of the following:

1. Bank interest rates.
2. Fuel prices
3. Electricity prices

Foreign investors will be providing funds and to power this money is by joint ventures with local developers of Indonesia. Much of the Construction Investment comes from abroad:

1. Japan
2. Korea
3. China

Amid a surge in the middle-income bracket, Indonesia’s property industry is expected to keep growing in 2015. This is expected to grow to 90 million people this year. The industry is also expected to gain from increased infrastructure spending, as some of the reserve funds from the reduction of fuel subsidies will be transferred to infrastructure development.

Growth will mainly be driven by the:

a. Landed houses
b. Apartment subsectors.

In March, the fact that foundation contractors plan to increase prices by 5%; it will also have an impact. The price increase will mostly affect the following sectors:

1. Small developers
2. Low-level segment.
The middle-upper market should not be significantly impacted, however, because of the strong rise in purchasing power. Property developers in the retail and condominium segments are particularly interested in the suburbs and outskirts of Jakarta.

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