Marketbeat Reports, Q4 2023

Outlook: Inbound Market Will Improve Gradually in 2024

According to Airports Council International (ACI), the year 2024 is expected to be a milestone for global passenger traffic recovery to reach 9.4 billion passengers, surpassing that in year 2019.

Even though the Asia-Pacific region is expected to have substantial jump of passenger traffic in 2023 along with the opening of the Chinese outbound travel, the inbound passenger arrivals is expected to improve in slower pace and gradually in 2024 in response to the remained challenges in overseas tourism and looming economic concerns.

The overall room vacancy rate is expected to improve in the 2024, to certain extent, as the impact of the political activities over the year to 33.8%. Positive growth in room rate (ADR / night) is expected to continue in line with the increase in room demand and is projected to reach about 16% in 2024

Landed Residential H2 2023

Demand: Improved Market Confidence

A consistent improvement of market confidence towards landed residential products was observed throughout the second half of 2023. Middle segment remained at the forefront of demand, accounting for approximately 33.8% of the total demand, while the Upper segment followed closely, contributing 26.5% to the total units sold during the review semester.

Notably, a substantial portion of this demand came from end-users (78% of the buyers) which included a mix of first-time homeowners and more established families seeking larger residences to accommodate their expanding needs.

An average monthly take-up rate of 27.4 units per estate was recorded in the second half of 2023, reflecting a year-on-year rise of 26.4% This figure corresponds to an average absorption value of Rp 55.3 billion per estate per month, a 37% rise from that in the preceding year, which signified a favorable increase in market purchasing power for landed residential products.

The average transaction value per unit was around Rp 2.02 billion, indicating an 8.4% increase compared to in the second half of 2022. Tangerang recorded the highest average absorption rate per estate, registering an average of 40 units per month, while Bekasi followed with 20.5 units per month.

In late November 2023, the government provided incentives for full VAT exemption for the purchase of new homes under IDR 5 billion with maximum taxed value of IDR 2 billion, which is applicable until June 2024. From July to December 2024, the VAT incentive will be reduced to 50% VAT discount.

Moreover, in November 2023, Bank of Indonesia opted to maintain the benchmark interest rate at 7% to manage inflation in 2024. Developers perceive this increase as reasonably moderate, with no excessive impact on mortgage rates (KPR).

The average prime mortgage lending rates provided by banks have been relatively steady throughout 2023. Numerous banks have also relaxed their mortgage regulations and developers have proactively introduced competitive payment options such as down payment installment programs and express mortgages. Mortgages remained as the favored payment method in the second half of 2023, making up 73% of transactions, trailed by cash installments at 18%, and hard cash payments at 10%.

Supply: Tangerang Continued to Record The Highest New Supply

While the cumulative supply of landed residential remained stable throughout 2023, a significant supply growth was observed in the second semester compared to that in the first half of 2023. A total of 9,019 units were introduced the market, spanning both in the Greater Jakarta area and Karawang area.

Tangerang continued to dominate the new supply, holding a substantial share of 65%, with new estates such as CitraGarden Bintaro and Park Serpong, followed by Bogor-Depok area with a combined percentage of 14%.

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