Indonesia property sector expecting big things in 2011
January 28, 2011 - Indonesia
Indonesia's property industry should grow about 20 to 30 per cent this year according to to Hiramsyah Thaib, president director of large developer Bakrieland Development.
"Housing demand is still quite high, and on the other hand the economy keeps improving and the rate of housing credit is reaching its lowest point.
The property business will be booming in 2011," Hiramsyah Thaib was quoted as saying by state news agency Antara.
Indonesia's Public Housing Ministry has estimated property sales at around IDR90 trillion (US$10 billion) in 2010, an increase of 15 percent from 2009.
"Clearly some sectors have grown, indicated by motorbike and car purchases, in the past five years. We believe in 2011 the turn will be for the property industry," Hiramsyah said.
Housing demand reached eight million units in 2010, he added, while public purchasing power continued to increase while aggressive lending in the property sector brought mortgage rates down to between 9 and 11 percent.
Part of the growth, he said, was because the economy had largely escaped the worst of the 2008 economic crisis.
The property sector was lifted by developers using their own funds, he said, unlike during the 1998 crisis, when the industry relied on funds from banks.
Bakrieland, the nation's second-largest property firm by assets, has already budgeted IDR2 trillion (US$222 million) to IDR2.5 trillion (US$277 million) for expansion this year, Hiramsyah said.
The company's projects include Sentra Timur in East Jakarta, which includes three towers each housing 300 condos.
Panangian Simanungkalit, a property analyst and consultant with Panangian Simanungkalit & Associates, said that despite a possible rise in Bank Indonesia's benchmark interest rate, lenders would likely keep their mortgage rates at reasonable levels.
"Banks are now very competitive in mortgage lending, so I don't see why they would raise it too much this year," Panangian said.
The central bank said last week that it would keep its benchmark rate at a record-low 6.5 percent despite growing inflationary pressure, according to the Jakarta Globe.
Source: Property Report
Trends, property prices, property market, real estate market