Wednesday, 3 July 2013

THE PROPERTY SECTOR NOT AN ECONOMIC LOCOMOTIVE



Observers predicted Indonesia’s property in­dustry was going to chalk up growth of 15% - 20% in 2013. Today the property sector made significant performance in reducing unemployment. The annual transaction value was also remarkable: at national scale it could come to Rp 300 trillion per year. However, contribution of the property sector to national economic growth was rated as not significant. Chair­man of the Indonesian Real Sector Association Setyo Maharani stated on Monday (4/2/2003) admitted that the property sector was not playing their role in economic growth. Comparing the condition with other countries he said that the property industry in other countries were playing the role as locomotive of economic growth.

In Indonesia, according to Setyo, the devel­opment had not reached that stage. This was vis­ible in the contribution of the property sector to GDP which was still less than 10%. Setyo stated that the property sector had 175 subsectors which made this sector highly comprehensive with a wide range of by­ products like shops, marketplaces, manufacturing, financing, transportation, energy, tourism, telecommunication and education. The Government, he said, needed to involve associations in the process of law making to avoid complications during implementation afield. “Our hope is that the property sector can play greater role in national economic development” Setyo remarked.

Growth of the domestic property market and the highly prospective market had made international investors look at Indonesia as one of the destination sports for their investment. He stated that Jakarta as Indonesia’s capital city and barometer of econo­my and business was seen by the investors as moat promising market for property development, aiming at the middle and upper market segment. However Setyo made a footnote there were preconditions to be met before drumming up those investors, i.e. infra structure building in Jakarta to solve problems like traffic jams.

One of the concepts that could be adopted by DKI Greeter Jakarta including developers in project building was Transaitr-Oriented Development projects (TOD). Besides solving traffic jam problems, development of TOD could also uplift property value in the related regions which would promise long term high return investment.

Setyo also estimated the domestic property market in 2013 would benefit greatly from the favorable macro-economic condition where people's pur­chasing power was high due to increased income of the middle and upper group plus prosperous invest­ment climate. The market condition of property’s subsectors in 2013 such as office or commercial canters was predicted to grow in terms of sales up to 12% -18% of total capitalization projected at Rp 235 tril­lion.

Meanwhile based on analysis of some prop­erty consultants accumulation of construction proj­ects underway since end of 2012 last were at finish­ing stags so they had the potential of supplying additional of 8,626 units of apartment units in 2013 - while annual supply for 2012 had reached 22,483 units or 41% higher then supply growth compared to supply growth of 2011. In case of office space in Jakarta in 2013 projection by some consultant companies showed there were positive signals of growth.

The trend of positive growth in 2013 was driven by increased demand from abroad combined in the banking industry, oil industry and mining, and telecommunication. The growth was based on demand for office buildings of good quality at global level mostly in the main cities of the world which were consistently demanded by users or investors.


Business News - February 08,2013

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