New industrial land supply has been added to the market during 2020. Suryacipta Subang Smartpolitan has just done its groundbreaking in the 4th quarter of 2020. Land sales transactions until the end of 2020 is expected to reach about 150 hectares or 53.3% lower than the absorption in 2019. Those deals in 2020 were coming from the automotive, F&B, and logistics sectors. Due to slow demand for industrial land, land price remained relatively unchanged. Meanwhile, the supply of warehouses for lease in the Greater Jakarta area reached 1.9 million sqm as of the end of year 2020 with occupancy rate stood at a relatively healthy rate of 89.5%. Warehouse demand from logistics related firms including e-commerce increased over the review period.
As the land bank in the Greater Jakarta area become more limited, future development of industrial estates will potentially extend to eastern corridor of the Greater Jakarta such as Karawang, Purwakarta and further to Subang, in line with the development of supporting facilities. The industrialists expect that inquiries from foreign companies will start to rebound upon the lift-up of the large-scale social restrictions (“PSBB”) in Jakarta and the distribution of covid-19 vaccines. New omnibus law regulation will give easiness to foreign investors to expand their business in Indonesia, which is expected to increase industrial demand for both industrial land and warehouses. Warehouse sector will continue to grow, particularly from the logistics players, with a further 112,000 sqm forecast to enter the market until 2021.
Landed residential sector has proven to be quite resilient amidst the pandemic. Despite the downward pressure in the first months of the pandemic, market activities has shown significant improvement since the new normal period, bringing the 2020 YoY supply growth to 2.97% with the year’s total net supply of 11,371 units, including those from 3 new estates that were launched in H2 2020. Lower-middle to Middle segment developments contributed to the majority of new supply, as many developers focused on launching of some of their most affordable products.
In light of the positive economic outlook of 2021, market activities are expected to improve. While average land price is expected to remain stable or grow conservatively prior to the vaccine rollout, end-users, who dominate the landed residential buyers, will take advantage of this condition to purchase their first houses. Aside of that, the low Central Bank of Indonesia’s reference rate for credit interest (which will affect the mortgage interest rate) is expected to attract more people to purchase houses through mortgage payment. In the near-term, as buyers are still careful with their household budget, supply from Lower-middle to Middle housing segments are expected to still dominate the market, commonly priced in the range of Rp 800 million to Rp 1.5 billion.
