The Indonesia warehousing industry growth is experiencing an unprecedented surge, driven by e-commerce and technological advancements. As businesses adapt to digital trends, the demand for modern, efficient warehousing solutions has skyrocketed.
This shift has positioned the warehousing sector as a formidable competitor to traditional real estate investments. The industry is reshaping Indonesia’s logistics landscape and attracting investors seeking high-yield opportunities. By examining these dynamics, it becomes clear why warehousing is emerging as a prime alternative to conventional property markets.
Indonesia Warehousing Industry Growth Hits 9.56% in 2024
The warehousing sector in Indonesia continues to thrive, showcasing remarkable year-on-year growth of 9.56%, according to the Central Bureau of Statistics. During the second quarter of 2024, the sector contributed IDR 345.6 trillion or USD 21.2 Billion to the country’s GDP. This robust growth highlights the sector’s critical role in Indonesia’s economy.
Additionally, Colliers International reported a surge in demand for warehouse rental spaces in major cities such as Jakarta, Semarang, Solo, and Surabaya by the end of 2023. Over the past five to seven years, the industry has undergone substantial development, driven by increasing logistical needs and modernization efforts.
These factors underscore the warehousing sector’s ability to meet the growing demands of e-commerce and other industries such as, automotive, electronics, pharmaceuticals, medical equipment, retail, and furniture. These industries drive consistent demand, further solidifying the sector’s position as a high-growth asset class.
How Real Estate Compares to Warehousing Growth
In contrast to the rapid growth of the warehousing industry, Indonesia’s real estate sector has shown steadier progress. Contributing 2.4% to the nation’s GDP in 2023, real estate remains a vital part of the economy. However, its growth is driven primarily by residential and commercial properties, which tend to evolve more gradually than the fast-paced logistics sector.
Unlike the warehousing industry, real estate has been slower to adapt to digital transformation and the increasing demand for technological innovation. While traditional property investments offer long-term stability, they may lack the flexibility to respond to dynamic market changes as effectively as warehousing. This contrast underscores why investors are increasingly considering warehousing as an alternative or complementary investment option to real estate.
Modern Warehousing: A Lucrative Investment Opportunity
The logistics sector has shown remarkable resilience, particularly through the third quarter of 2024. JLL Indonesia identified logistics as a robust industry, alongside the landed housing market, due to its steady demand.
Yunus Karim, Head of Research at JLL Indonesia, highlighted the stability of modern warehouse facilities in Jakarta, which achieved a 90% occupancy rate in the third quarter of 2024. He stated, as reported by kontan.co.id, “This sector has healthy demand, similar to landed housing. Developers are responding to demand from manufacturing, automotive, and other businesses by building new projects. Of the incoming supply, the market absorbed approximately 80%.”
These high occupancy rates and absorption levels demonstrate the growing appeal of the warehousing sector for investors. Modern warehouses cater to a diverse range of industries, ensuring consistent demand. This combination of resilience and growth potential makes warehousing an attractive alternative to traditional real estate investments.
The Road Ahead for Indonesia’s Warehousing Sector
Farazia Basarah, Country Head and Head of Logistics & Industrial at JLL Indonesia, emphasized that logistics service providers remain the dominant tenants of modern warehouses. She highlighted the steady growth of the sector, driven by strong demand and consistent supply additions.
Developers in Jakarta have been proactive in collaborating on business opportunities and expanding their portfolios to meet market needs. This trend is expected to sustain the sector’s robust health in the coming years. The combination of active development and high demand positions the warehousing industry as a key driver of Indonesia’s economic progress and a reliable investment choice for the future.
Key Takeaways for Investors and Businesses
Indonesia’s warehousing industry is rapidly evolving into a high-yield investment hotspot. Fueled by e-commerce growth and technological advancements, it continues to thrive with robust demand and active development. These factors solidify the sector’s position as a promising alternative to traditional real estate investments, offering investors opportunities for consistent growth and significant returns in the coming years.
Source: finance.detik.com, industry.kontan.co.id
Image: Getty Images