Indonesia’s real estate market is ready for significant growth, with projections indicating an increase from $64.78 billion in 2024 to $85.97 billion by 2029. This remarkable growth, calculated at a compound annual growth rate (CAGR) of 5.82% during the forecast period, reflects the country’s robust economic development and the increasing demand for property.
Surge in Indonesia’s property market value
The Indonesian real estate sector, comprising residential, office, retail, hospitality, and industrial properties, has shown resilience and strength, particularly in the face of global challenges like the COVID-19 pandemic. The market’s growth is driven by several factors, including rapid population growth, high urbanization rates, and government-supported affordable housing projects. Notably, the ‘One Million Houses’ program, aimed at constructing at least 1 million units per year, has significantly contributed to this expansion.
Implications for property investors and owners
For property investors and current property owners in Indonesia, this growth trajectory presents numerous opportunities. The increasing market value suggests a rising demand for properties, potentially leading to higher rental yields and capital appreciation. Investors looking to enter the Indonesian market, especially in burgeoning urban centers like Jakarta and Bali, can expect a favorable investment climate.
The residential sector, in particular, is expected to see a surge in sales, driven by the middle-class populace’s growing demand for homes. This trend is further bolstered by government stimuli and relaxed foreign ownership regulations, making it an opportune time for foreign investors to consider Indonesian real estate.
Driving factors behind the market growth
Several key factors are driving this market growth. The Indonesian government’s investment in major infrastructure projects, such as the Jakarta MRT and LRT projects, is enhancing connectivity and making peripheral areas more accessible and attractive for property development. Additionally, the rise of Proptech in Indonesia, focusing on selling, purchasing, and leasing through online platforms, is revolutionizing the real estate sector.
The market’s resilience is also evident in its recovery from the pandemic’s impact. Despite initial setbacks, the real estate sector has bounced back, with property sales for medium houses increasing and a moderate rise in residential property prices.