The Indonesia construction market faces a critical year in 2025, as it navigates through a period of global economic uncertainty as well as domestic challenges.
Despite rising material costs and labor shortages, the market’s growth is still projected at 5.48%. according to Cahyono Siswanto, National Research Manager at BCI Central.
Speaking at the BCI Breakfast Briefing “Indonesia Construction Market Outlook 2025” held at Hotel Bidakara in Jakarta on December 28, 2024, Cahyono stated, “The overall market for construction projects in 2025 is expected to grow by 5.48% compared to 2024. This forecast includes only building and civil engineering projects, excluding oil and gas.”
The government’s ongoing infrastructure initiatives and the growing private sector investments in urban development will drive this growth. Both sectors will continue to play a crucial role in shaping the future of Indonesia’s construction market.
Key Drivers for Indonesia’s Construction Market Growth in 2025
The government’s intensified focus on infrastructure development, industrialization, and digital transformation will be key drivers of Indonesia’s construction market growth in 2025. Under President Prabowo Subianto’s leadership, these areas are seen as essential to boosting economic resilience and strengthening the national construction sector.
“The government needs to strengthen regulations and incentives to attract new investments, especially in the manufacturing sector, which supports both domestic needs and exports,” said Marangkup Manik, an industry market analyst, during the BCI Breakfast Briefing, as reported by marketing.co.id.
By enhancing regulatory frameworks and creating a more conducive investment environment, the government will help expand construction projects, particularly in industrial infrastructure. As both public and private sector investments grow, the construction market is set for sustained expansion, supporting Indonesia’s long-term economic goals.
Impact of Private Sector Investments on Construction Growth
Private sector investments will also play a crucial role in Indonesia’s construction market growth in 2025. With urbanization accelerating, the demand for residential, commercial, and industrial properties will continue to rise, especially in fast-growing cities like Jakarta and Surabaya.
Developers are responding by increasing their focus on large-scale housing projects, office buildings, and mixed-use developments.These projects will not only address the needs of urban communities but also contribute to job creation and economic growth.
Moreover, investments in sustainable and green building technologies are gaining momentum, aligning the sector with global environmental standards.
As both domestic and international investors show confidence in Indonesia’s construction potential, the market is poised for continued expansion, creating a vibrant and competitive industry.
Challenges and Opportunities in Indonesia’s Construction Market
Despite the promising growth forecast, Indonesia’s construction market faces several challenges in 2025. One significant issue is the ongoing shortage of skilled labor, which could delay projects and increase overall costs.
The rising price of raw materials and disruptions in global supply chains could further strain the industry. However, these challenges also present opportunities for growth.
The increasing demand for affordable housing and infrastructure in emerging urban centers presents a significant market opportunity for developers and investors.
As both the government and private sectors work together to address these challenges, the construction market can continue to expand and contribute to Indonesia’s broader economic development.
Outlook for Indonesia’s Construction Market in 2025 and Beyond
Indonesia’s construction market is expected to reach IDR 381.61 trillion in 2024, with the building sector contributing IDR 227.76 trillion (59.69%) and the civil sector accounting for IDR 153.84 trillion (40.31%).
This growth will largely stem from ongoing infrastructure projects and increasing demand for residential and commercial properties. Looking ahead, Indonesia’s construction market is poised for continued growth, with a projected 5.48% increase in 2025.
Although challenges such as rising material costs and labor shortages persist, the strategic focus on infrastructure, urban planning, and sustainability will help sustain growth.
With favorable government policies and increased private sector participation, Indonesia’s construction market will remain a key driver of economic development in the coming years.
Source: kompas.com, marketing.co.id, lintaswarta.co.id
Image: Getty Images