Jakarta is Prime Location for International Investors

Posted on 10 December, 2012 by Jodee Redmond

Indonesia’s capital city is home to almost 10 million people and according to a new real estate forecast, it’s the place commercial property investors should be focusing on in 2013.

PriceWaterhouseCooper (PwC) and the Urban Land Institute have released their Emerging Trends in Real Estate – Asia Pacific 2013 report, and the results recommend Jakarta as a prime location for international investors.

PwC points to Indonesia’s impressive economic turnaround in recent years as the main factor making the city a lucrative market. The country’s GDP is growing at a rate of approximately 6.5 per cent per year, and direct foreign investment is increasing at a much higher rate.

According to the survey, it grew by 39 per cent in the first half of 2012. Increased demand for office rents drove rates up by 29 per cent on a year-on-year basis in the third quarter, according to DTZ, a property services firm.

Prospective investors are cautioned that there can be difficulties in Jakarta, however. There have been issues with disputes over land ownership and local partners who have proved untrustworthy. Foreign investors have had difficulty arranging financing at inexpensive interest rates as well.

Shanghai hangs on to the number two spot in the region, and its rank remains unchanged from last year. According to the survey, commercial property investors are turning away from more traditional properties in favor of retail holdings.

Foreign investors are not as tempted to buy into this market as they have been in the past. The lack of available commercial-grade buildings and a market that has already become saturated are two factors making investors shy away.

Singapore moves into third spot after being the top-ranked place to invest last year. The city has a strong demand for Class “A” office space and the country continues to attract employees from multinational firms. The supply of real estate projects is ongoing. PwC predicts both supply and demand will stay strong over the next 12 months.




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