DEMAND
Total passenger arrivals at Soekarno-Hatta International Airport as per September 2023 reached approximately 18.5 million passengers. It is estimated that the target number of passengers in 2023 will be achieved. The positive growth in the number of visitors to Jakarta has had an impact on the increasingly active MICE activities in Jakarta.
The increase in MICE activities such as BUMN/ministerial/corporate institution meetings, international music concerts, sporting events and exhibitions has had a positive impact on increasing demand for hotel rooms in Jakarta Room vacancy rates until the end of 2023 continue to decline by 33.0%, 36.4%, 33.9%, 40.3% for 3, 4, 5 and Luxury star hotels, respectively. The overall room vacancy rate will continue to improve in the 2024 political activity year at 34.0%.
AVERAGE ROOM RATE GROWTH
Positive growth in room rate (ADR / night) is expected to continue in line with the persistent increase in demand for rooms, The average room rate (ADR / night) at the end of 2023 was recorded at: 3 stars – Rp. 460,570 (13% YoY); 4 Star – Rp. 816,320 (16% YoY); 5 Star – Rp. 1,791,130 (20% YoY); and Luxury – Rp. 2,253,460 (12.5% YoY). Room rates (ADR / night) have returned to pre-pandemic levels in 2019. Overall room rate (ADR / night) is projected to grow by around 16% in 2024.
LANDED RESIDENTIAL 2024
SUPPLY
The cumulative supply of landed residential remained relatively stable throughout 2023. In late November 2023, the government provided incentives for the purchase of new homes under IDR 5 billion and full VAT exemption for houses with maximum Tax value of IDR 2 billion, which is applicable until June 2024.
From July to December 2024, the government will grant a 50% VAT discount. Even though the VAT incentive is applicable only to ready stock units, developers are expected to remain active and launch new products due to sustained demand. The cumulative supply of landed residential is projected to increase steadily by about 2.6% YoY in 2024.
DEMAND
The cumulative demand is anticipated to grow by around 2.8% in 2024. The government’s free VAT incentives are expected to be the primary driver of overall demand for landed residential throughout 2024.
Furthermore, new policies related to facilitating foreigners in purchasing property in Indonesia using passports is also expected to contribute to demand in 2024, although not significantly. Despite the often carrying negative sentiments of political years on real estate sector, developers see the 2024 elections as an opportunity due to the expected increase in purchasing power.
In November 2023, Bank of Indonesia opted to maintain the benchmark interest rate at 6% to manage inflation in 2024, which is perceived reasonably moderate with no excessive impact on mortgage rates (KPR). Nevertheless, developers will continue to offer appealing promotions and strategies to boost sales.
PRICE GROWTH
As inflation affect construction costs and infrastructure advancements in Jabodetabek such as MRT, LRT, and toll road expansions will lead to increase of land prices, the average selling prices will continue at upward trend in 2024. Shall the macro economy improve as expected and the political sentiment remain positive, landed residential prices are expected to further rise, especially after the smooth conclusion of the 2024 elections.
