While the global housing market like in the US and China are facing slowdowns, Indonesia’s property sector is showing surprising resilience. A new report reveals that millennial drives continued strength and intriguing dynamics in the Indonesian property sector for the first quarter of 2024.
Strong Housing Demand
A report by Jakarta-based real estate fintech platform reveals continued resilience and intriguing dynamics in Indonesia’s real estate market for Q1 2024. A key takeaway is that millennials fueled 55% of property transactions, highlighting strong housing demand from this generation and first-time buyers.
The report shows millennials driving 55% of transactions. This underscores their crucial role in the market, especially with shifting interest towards developing areas and rising demand for rentals due to increasing interest rates. Millennials dominate transactions, opting for affordable homes (Rp 200 million to Rp 600 million) in areas like Bogor, Tangerang, and Bekasi.
The report also identifies the 2024 election and the government’s Tax on Sales Value Borne by the Government incentive as the two main factors shaping the market landscape in early 2024. Looking ahead, the report predicts rising interest rates to further encourage the housing rental market, particularly among millennials seeking more affordable housing options.Â
No Cloud of Uncertainty
The report is backed by hard data. Just a month before, Bank Indonesia (BI) released a survey showing a massive jump in residential property sales: a whopping 31.16% year-on-year increase compared to the previous quarter’s 3.37%. That’s a clear sign that people are feeling confident about buying property in Indonesia.
The increase in residential property sales in Q1-2024 occurred across all house types. However, the highest contribution came from large houses. In detail, the increase in sales of small houses was 37.84% (year-on-year), medium houses 13.57% (year-on-year), and large houses 48.51% (year-on-year).
Indonesia’s real estate sector is projected to remain highly favorable in the coming years. Property experts are optimistic that the conclusion of the 2024 general election will serve as a positive catalyst for the real estate industry, allowing developers to confidently resume construction projects without the cloud of uncertainty.
And not only being shaped by government incentives, Indonesia’s property market is also receiving a significant boost from a dynamic new demographic: millennials. What does it mean? With a wide range of preferences, lifestyles and priorities, they challenge the property market to be more creative and innovative.
Foreign Investment: Not Out of the Picture
Even with the changes driven by millennials, foreign investors might still play a part in Indonesia’s property market. Here are some ways this could happen:
— Meeting Millennial Needs: Foreign developers could build projects that millennials want: affordable well-designed homes in growing areas across Indonesia. This might involve teaming up with local developers or Indonesian real estate consultants.
— Building Up Infrastructure: Foreign investment could go towards improving infrastructure in these growing areas. This would make them more appealing to both Indonesian and international buyers.
— Tech Savvy Solutions: Foreign investors who know a lot about property technology could work with Indonesian companies. Together, they could create new tools that make buying property easier for millennials.
By adjusting to the new market trends driven by millennials, Indonesia provides more attractive opportunities to foreign investors in the property sector. Are you interested in joining Indonesia’s property market? See our contact form below and let’s discuss how Seven Stones Indonesia can assist you in building your business.