Supply: Tangerang Dominates New Supply
The supply of landed residential units remained relatively stable during H1 2023. The market witnessed a total of 4,445 units of additional supply. Tangerang area dominates the new supply with a big portion of 51%, followed by Bogor and Depok of 22%. The Upper segment units dominated the new supply this semester with 34.3% of the total supply, followed by the Middle segment of 27.3%.
However, the rate of new launches slowed down compared to in the previous period by -11.1%, resulting in a somewhat balanced supply-demand dynamic. Developers continues to showcase their confidence in the market by introducing higher-end products in various estates, which signifies their optimism on the overall market confidence and potential.
As of June 2023, the average land price in Greater Jakarta was reported at approximately Rp 12,428,000 per sqm, signifying a 1.9% growth since the last semester. The gradual impact of inflation on construction and building materials has been seen on the increase of sales price.
The progress made in transportation infrastructure also contributed to the upward trajectory of land prices. Consequently, the year-on-year average sales price has experienced a notable increase of 4.49%.
Outlook
Despite the forecast of a challenging global economic landscape in 2023, which may instill a sense of caution among developers and investors regarding their development plans, developers in the landed residential sector maintain a notable level of optimism for the upcoming semester.
This positive outlook is primarily driven by the fact that the majority of house buyers are end-users and first-time homeowners who are motivated by primary housing needs – their continued demand for houses contributes to the developers’ confidence of the market.
The escalation of development costs driven by inflation, along with advancements in infrastructure facilities within the Greater Jakarta, is anticipated to contribute to a subsequent rise in land prices in the affected regions.
Moreover, the average sales price is expected to continue growing throughout the rest of 2023. The Central Bank’s initiation to increase the reference rate during H1 2023 may prompt banks to gradually raise their mortgage interest rates for the remaining duration of the year and as mortgage payment remains the most favorable term of payment, this projected increase in interest rate is expected to impact demand.
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In 2022, the firm reported revenue of $10.1 billion across its core services of property, facilities and project management, leasing, capital markets, and valuation and other services.
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