Indonesia Property Industry Report - 2014

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Indonesia Property Industry Report - 2014

This report profiles Indonesia’s property industry, covering market data and trends through the first half of 2014. The report also highlights key leading players in the sector including Lippo Karawaci Tbk (Lippo), Bumi Serpong Damai Tbk (BSD) and Ciputra Development Tbk (Ciputra).

Indonesia’s property industry has witnessed consistent growth in recent years. The country’s positive economic climate in tandem with a growing middle-class have boosted domestic demand and increased developers’ confidence to continuously launch property projects in Indonesia. This has resulted in higher sales of most of the property industry’s sub-sectors as well as higher rental rates.

However, the first half of FY14 saw some deceleration in growth due to a challenging macroeconomic condition marked by high interest rates, high inflation, depreciating currency and low GDP growth. Property firms have held the government’s most recent mortgage regulation, as well as the country’s macroeconomic conditions and political uncertainty during the elections, responsible for their below average performance during the first six months of the year. The biggest pressure came from Bank Indonesia’s (BI) loan-to-value (LTV) regulation, which requires first-time home buyers to make a minimum down payment of 30% of the value of the house.

Nonetheless, due to limited land availability and persistent demand, the industry is expected to revive and occupancy levels are likely to rise in the near term. Backed by Indonesia’s developing economy, especially domestic consumption, average rental rates for offices and retail space are also expected to increase along with occupancy.

Key Points:

• During May-November 2013, the BI policy rate witnessed steep increase of 1.75% in five phases. Surge in inflation was the primary reason for the increase in BI rate. Rise in interest rate has hurt the industrial growth as well as the residential property market as the loans have become costlier.

• Indonesia has seen rapid urbanization during the last decade, with cities being the key driver of economic growth and job creation. The urban population increased from 43% in 2001 to 51% in 2012. As a result, the percentage of households residing in their own houses has declined gradually.

• The Asia-Pacific region saw dynamic annual growth in the average house price index for Q1/2014 averaging 6.6% on a y/y basis. Australia, Taiwan and China recorded the strongest annual price growth in their property markets. Meanwhile, Indonesia recorded a y/y growth of 9.1%.

• After a gradual appreciation during 2010-12, the Residential Property Price Index (14 cities) shot up in 2013 due to strong demand. However, cooling measures undertaken by BI brought down the index’s growth in 1H2014.

Table of Contents

1. Industry Profile
1.1 Sector overview
1.2 Residential sector
1.3 Industrial real-estate
1.4 Office space
1.5 Retail space
1.6 Hospitality space

2. Market Trends and Outlook
2.1 Construction sector trends
2.2 Property financing
2.3 Market outlook

3. Leading Players and Comparative matrix
3.1 Leading players
3.1.1 PT Lippo Karawaci Tbk (Lippo)
3.1.2 PT Bumi Serpong Damai Tbk (BSD)
3.1.3 PT Ciputra Development Tbk (Ciputra)
3.2 Comparative matrix
3.3 SWOT analysis

4. Tables and Charts

Table 1: Asia-Pacific house price index (Q1/2014)
Table 2: House ownership in major provinces of Indonesia
Table 3: Lippo Karawaci financial highlights
Table 4: BSD financial highlights
Table 5: Ciputra financial highlights
Table 6: Key financial ratios of the leading players

Chart 1: Quarterly GDP growth rate-Indonesia
Chart 2: Trade balance of Indonesia (in USD mn)
Chart 3: Average monthly USD to IDR exchange rate
Chart 4: Government budget deficit (as a % of GDP)
Chart 5: CPI Inflation during FY13/14-Indonesia
Chart 6: BI rate in Indonesia
Chart 7: Indonesia’s GNI per capita, Atlas method
Chart 8: Urbanization and percentage of households by ownership status
Chart 9: Residential property price index: 2002=100: Q/Q: 14 Cities (in %)
Chart 10: Residential property price index: 2002=100: Q/Q: 14 Cities (in %)
Chart 11: Residential property price index: 2002=100: Y/Y: 14 Cities (in %)
Chart 12: Total apartment sales in Greater Jakarta area
Chart 13: Average selling price and rental yields in the Greater Jakarta apartment market
Chart 14: Total industrial area stock in Greater Jakarta area
Chart 15: Average selling price in the Greater Jakarta industrial real estate market
Chart 16: Total office space stock in Greater Jakarta area
Chart 17: Monthly rental in the Greater Jakarta office space market
Chart 18: Total retail space stock in Greater Jakarta area.
Chart 19: Monthly rentals in the Greater Jakarta retail space market
Chart 20: Total room inventory (3-5 star) in Greater Jakarta area
Chart 21: Average room rate in the Greater Jakarta
Chart 22: Construction value index-Indonesia
Chart 23: Y/Y growth in construction value index by major provinces-March 2014
Chart 24: Prime lending rate for home loans-Average of 32 major banks
Chart 25: Total outstanding home loans disbursed by commercial banks in Indonesia
Chart 26: Projected residential property price index: 2002=100: Q/Q: 14 Cities
Chart 27: Segment wise distribution of company's revenue (Lippo)
Chart 28: Segment wise distribution of company's revenue (BSD)
Chart 29: Segment wise distribution of company's revenue (Ciputra)

Number of pages: 28
Release Date: Tue, 23 Sep 2014