Jakarta’s real estate market is experiencing positive developments, particularly in the serviced apartment sector, which is showing signs of recovery in the post-pandemic era. According to Colliers’ quarterly property market report, occupancy rates have significantly rebounded by 3.5% to reach 60.5% in the third quarter of 2023.
This increase is attributed to the relaxation of COVID-19 restrictions, resulting in a revival of business activities and an influx of expatriates from countries such as Japan, South Korea, and India. The renewed vibrancy is an encouraging sign for apartment owners, as it indicates a potential increase in revenue streams following the pandemic-induced downturn.
The rise of luxurious serviced apartments outside Jakarta’s CBD
The rental rates in the Central Business District (CBD) remain stable. However, on the outskirts, a shift is taking place. The rise of new, luxurious serviced apartments outside the CBD is causing rents to go up. This trend is essential for potential renters and investors to consider. These new establishments offer top-notch amenities and are affecting the average rental costs, mainly in non-CBD areas. If you’re planning to rent, you may need to adjust your budget, especially if you’re interested in newer, upscale options.
As an apartment owner, the current scenario presents a complex challenge. The stable rates in the central business district (CBD) suggest a market that holds its value and offers stability. However, the increasing rents in other areas indicate a growing competition, which may require strategic improvements to properties to retain tenants and attract renters who are willing to pay higher rates.
Finding opportunities in Jakarta despite caution
Market analysts predict a cautious optimism in the rental market. Despite the increase in the supply of rental properties, which traditionally lowers rental growth, the average rental rates are expected to modestly increase by 1% to 3% over the next three years. This forecast, while conservative, is good news for property investors who are seeking opportunities in a recovering market. The main driver of this growth is the expected entry of upscale serviced apartments, which will demand higher rentals, and thus push the market averages upward.
Investors looking to capitalize on potential growth should brace for short-term volatility in the market. A significant supply influx and global economic uncertainties are applying downward pressure on occupancy rates, which can lead to fluctuations. Therefore, it is important for investors to remain attuned to these potential changes in the market.
Indonesia’s long-term future looks promising
The long-term future of Indonesia, and particularly Jakarta, looks promising with continuous infrastructure development, political stability, and investment-friendly policies in place. These factors make the country an attractive destination for foreign direct investment. The arrival of multinational corporations will also lead to an increase in demand for serviced apartments, which will benefit owners, renters, and investors alike and create a ripple effect of prosperity.